Overview of Vietnam's Transport Sector PDF

Vietnam National Transport Strategy Study (VITRANSS)
Final Report
Summary
3 OVERVIEW OF VIETNAM’S TRANSPORT SECTOR
General
The transport sector of Vietnam consists of the full range of transport modes: road,
railway, inland waterway, coastal and sea shipping, and aviation. The transport
sector grew significantly during the 1990s. Interprovincial traffic flow, for instance,
increased between 1992 and 1999 by 2.1 and 2.9 times for passenger and goods,
respectively. This was supported by the development of transport infrastructure
during the 1990s and the effects of partial transport deregulation. In addition to
general reforms, the transport sector saw extensive commercialization. Various
new services commenced such as container transport on road, rail and inland
waterway, bonded transport, ICD operation, scheduled liner operation even in
coastal shipping, liberalized transit transport between Lao PDR, etc.
The active investment in transport infrastructure with particular regard to the

rehabilitation and upgrading of all modes, including urban and rural transport, has
been continuing. There are 42 transport projects that are either ongoing or
committed. Many are expected to be completed by 2000-2003. The projects have
a total cost of US$ 5.7 billion. Of this amount, 72% is for roads followed by air
(12%), ports (6%), railway (2%), inland waterway (2%), rural transport (3%), and
urban transport (3%).
At present though, Vietnam’s transport infrastructure and services are still weak
and there are a number of areas that need immediate attention: infrastructure is
still needed to fill the gaps and to meet the growing demand in many locations.
Institutional arrangements and regulatory framework for transport services need to
be further improved to facilitate the smooth flow of goods and people under a
competitive environment. There is also a growing concern among the government
and donors on how to establish a mechanism to promote development of the
transport sector more effectively, to include, among others, building a sustainable
infrastructure maintenance mechanism system, expanding own source of funds,
strengthening operation and management capacity, balancing the investment
among the regions as well as among modes, encouraging private sector
participation, implementing institutional reforms (especially of SOEs), and
modernizing infrastructure and management.
Road and Road Transport
Vietnam has a total road network of over 200,000 km as of 1999. National roads,
however, account for merely 15,250 km, and provincial and district roads account
for 17,449 km and 36,372 km, respectively. Village roads, comprising 131,000 km,
are considered rural roads.9 The entire road network is relatively well developed
9
In addition to these roads, there are urban roads.
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Figure 3.1-a
National Transport Network: North to Central
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Figure 3.1-b
National Transport Network: Central to South
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but poor in quality. Only 60% of national roads and 27% of provincial are paved.
The poor condition of rural roads makes access to many villages difficult.10
Motorization level is still low but the number of vehicles has been growing rapidly.11
The main issues confronting the subsector include (1) Poor quality of service:
highly competitive truck services are very cheap by world standards but service
quality is low. Bus services are comparatively less competitive and some inefficient
bus SOEs achieve poor cost recovery, (2) Poor primary/secondary roads: many
roads are in poor condition because of the lack of maintenance systems, efficient
organizations and working methods, and finance. Low design standards hinder
operation of modern large trucks and buses, (3) Lack of tertiary roads: many roads
effectively only exist on the map; (4) Lack of legal framework: there is no road act
and implementing regulations, only a provisional decree defining the organization
of VRA and many gaps in definitions of guidance documents and procedures for
road management; (5) Inadequate road safety programs: government has yet to
approve the strategy for road safety and define a concrete program of
improvements. The cost of road accidents is huge – about 1-2% of GDP; (6) Weak
infrastructure management, especially at provincial level: lack of capacity for
planning, guiding, controlling and monitoring infrastructure. New
road/bridge/pavement management systems are required. Cumbersome decision-
making processes hinder improvement; (7) Lack of sustainable financing:
insufficient funds are allocated to maintenance, there is weak monitoring of fund
allocation and no reliable basis for forecasting future funds.
Railway Transport
Railway operates over 2,600 route-km, comprising seven main lines and several
branch lines. The network is all of single track with 1,000 mm gauge, 1,435 mm
gauge and dual-gauge sections. Vietnam’s railway subsector has two divisions:
transport and infrastructure. Government is responsible for infrastructure and VR
pays government 10% of its operating revenue as rent for the infrastructure. VR,
an independent SOE under the MOT, has a total of about 42,000 employees
including three transport unions (19,000 employees), 48 SOEs (22,600 employees
involved in track maintenance, construction, etc.) and a project management unit,
among others.
In 1999, VR operated 65 passenger trains and 91 freight trains daily.12 It has 339
diesel locomotives, 750 passenger cars and 4,338 freight cars. VR transported 9.7
million passengers (2.5 billion passenger-km) in 1998 and 4.8 million tons (1.5
billion ton-km) in 1997. Tracks, tunnels, bridges, and signals are generally in poor
condition but railways are relatively well operated technically. The Transport
Division generated a revenue of VND 900-950 billion in 1996-1998, of which
10
Motor vehicles cannot access 606 out of 9,816 commune centers.
11
In 1996 the number of registered vehicles was 132,800 cars, 66,500 buses and 201,400 trucks. The
number of motorcycles was 4,158,989.
12
There are five Hanoi-Saigon (taking 34 hours) and 12 Hanoi-Hai Phong (2 hours) passenger trains.
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roughly a half came from passenger transport. Expenditure exceeded revenue

slightly.
The subsector faces the following issues: (1) Lack of market orientation: the
railway does not have a proper legal basis, is mainly driven by production
concerns and is not successful in finding new markets; (2) Low utilization of
assets: track utilization is low. Locomotive utilization is very poor. Much equipment
is unserviceable and staff productivity is low; (3) Huge backlog of infrastructure
maintenance: past neglect means that much has to be spent on track, bridges and
tunnels just to sustain operations in the short-term. Most of the track needs
replacing in the next ten years; (4) Lack of modern business tools: the
management cannot assess the costs and revenues of carrying particular traffic,
assess alternative ways of utilizing assets, and predict the financial effects of
alternative business strategies; (5) Inadequate financial/performance agreement
between railway and government: the infrastructure payment is not directly related
to costs incurred (variable maintenance costs and costs on different lines). There
is no long-term agreement on investment, subsidy and operating/financial
performance.
Inland Waterway Transport
About 8,000 km of rivers are used for inland waterway transport, of which 6,230
km are managed by the VIWA and the rest by local governments. Transport
services are mainly provided by SOE operators in the north and by private
operators in the south. Although inland waterways play an important role in the
deltas, navigability is reduced due to a substantial dredging backlog and lack of
navigational facilities, among other reasons. Moreover, facilities and equipment of
river ports are mostly in poor condition.
Other issues besetting the subsector are (1) Poor port services: ports are in poor
condition, have few facilities and are badly managed; (2) Weak market
mechanisms: there is still major traffic handled by SOE operators under long-term
contracts which have not been awarded competitively; (3) Inadequate dredging
and navigational aids: lack of lights means that safe nighttime navigation is
impossible. Limited or uncertain draft constrains use of large vessels; (4) Lack of
legal framework: there is no inland water act and implementing regulations. There
is only a provisional decree defining the organization of VIWA, and many gaps in
definitions of guidance documents and procedures for waterway management; (5)
Weak infrastructure management: lack of capacity in planning, guidance, control
and monitoring. Completely new management systems are required (data bases,
maintenance, revenue collection etc.). There is no clear division of responsibility
for management of sea-cum-river ways, between VINAMARINE and VIWA; (6)
Lack of sustainable financing: more finance is required for maintenance but there
is no mechanism yet for providing predictable levels of finance.
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Maritime Transport
Ports: Vietnam’s ports are owned and operated by the state sector except for a
few.13 They are managed by VINAMARINE (Nghe Tinh, Quy Nhon, Nha Trang),
Vietnam National Shipping Lines (VINALINES, managing Hai Phong, Saigon,
Danang, Can Tho), local governments, and ministries other than the MOT and
their SOEs. Ports are broadly grouped into three: north (Hai Phong), central
(Danang) and south (Saigon). They suffer from shallow water depth 14, inadequate
infrastructure and cargo handling equipment. In spite of these constraints, cargo
traffic through Hai Phong and Saigon has been constantly increasing, except in
1997 when the country’s economy was hard hit by the Asian financial crisis. In
1999, Saigon and Hai Phong handled 8.3 million tons and 6.3 million tons,
respectively. Container vessels on longer voyages seek to avoid direct calls,
however, where the entry is through long channels. Hence, port expansion,
especially in the north and south is being promoted including the development of
new ports at Cai Lan and Vung Tau-Thi Vai.
Shipping: Some 10 Vietnamese shipping operators owned by the state and local
government, joint ventures, etc, and about 25 foreign shipping operators are engaged
in the country’s foreign trade. VINALINES, which holds 60% of the total national fleet,
shared only 11% of the total foreign trade due to stiff competition from foreign
operators. Domestic shipping consists of sea-cum-river shipping in the delta areas and
coastal shipping carrying mainly agricultural, mining and industrial products. Container
traffic for coastal shipping is gradually becoming significant. The performance of ports
and shipping are related. The small capacity and low efficiency of ports discourage
foreign shipping operators from assigning modern vessels to Vietnam routes.
Maritime Subsector Issues: The issues facing maritime transport include (1)
Limited competition in coastal shipping: most traffic is carried by the members of
VINALINES so real competition has not yet been achieved; (2) Lack of
experienced management: Vietnamese ship managers lack the experience to
compete with foreign operators; (3) Poor condition of shipping fleet: much of the
fleet is obsolete and in poor condition and cannot operate efficiently; (4)
Inadequate port services and charging system: cargo is lost or damaged and ships
spend excessive times in ports. Port charges are not closely related to costs
incurred at each port; (5) Lack of modern handling methods: lack of modern
equipment means long times loading/unloading, deterring investment in modern
vessels; (6) Inadequate dredging: draft limitations limit the size of vessel and times
of sailings; (7) Incomplete legal framework: VINAMARINE has insufficient planning
authority. There are insufficient regulations defining ship inspections and handling
compensation claims for oil spills. Virtually no regulations and guidance
documents exist for infrastructure maintenance; (8) Weak maritime management:
13
Vietnam International Container Terminal (VICT) is a joint venture project which commenced operation in
1998.
14
At present, Hai Phong can barely accommodate vessels of more than 7,000 DWT, while Saigon River
allows vessels of more or less 20,000 DWT.
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there are inadequate management systems for infrastructure management,

database management, pilotage management, project implementation; (9) Need to
attract foreign investment: the country needs to exploit opportunities for tapping
foreign investment in modern port facilities.
Civil Aviation Transport
There are 135 airports/airstrips for civil, military and police use in the country. The
CAAV is responsible for 18 airports and air navigation services. Three major
airports in Hanoi, Danang and Ho Chi Minh City (HCMC) handle 1.6 million, 0.4
million and 5 million passengers in 1998, respectively. Two airlines, both members
of the Vietnam Airlines Corporation (VAC), operate in the country - the dominant
one is Vietnam Airlines, which accounts for 37% of international traffic to/from
Vietnam and 94% of the domestic demand.
The subsector is confronted by various issues, including (1) Limited competition:

all Vietnamese airline operators are part of VAC and there is limited real
competition. There is no competition in supply of support services in airports; (2)
Lack of experienced management: the airlines lack management with extensive
business experience. Under forthcoming regional agreements on airline service
liberalization, this will handicap Vietnamese airlines; (3) Poor airport facilities:
insufficient capacity and inadequate design of passenger terminals constrains
service levels; (4) Need to develop new CNS/ATM system: under international
agreements, Vietnam will install a new air traffic management system, requiring
new investment and training; (5) Inadequate legal framework: regulations are
lacking for implementing higher technical and environmental standards. There is
no decree defining the organization of Vietnam Air Traffic Management (VATM),
which limits management at regional level; (6) Weak infrastructure management:
regulatory and commercial activities have still not been separated within the airport
authorities. Weak planning capacity and coordination procedures results in poor
plans and excessive costs; (7) Lack of sustainable financing: airport and ATM
charges are not related to costs of infrastructure provision.
Rural Transport
While many primary roads are being rehabilitated, there is growing concern to
improve accessibility in rural areas where 80% of the country’s population resides.
The main issues in rural transport include (1) Limited all-weather access by motor
vehicle: some communes are inaccessible by motor vehicle at some times of the
year, adversely affecting agricultural production and marketing and development of
the rural economy and services generally; (2) Price controls on transport services:
some truck tariffs in mountainous regions are controlled by government which
deters operators from offering services; (3) Weak infrastructure management:
planning and maintenance systems have not yet been adapted for implementation
under conditions found in Vietnam; (4) Lack of sustainable financing: there is no
mechanism for providing predictable funds for road maintenance.
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Cross-border Transport
A total of 24 provinces in Vietnam share the long border (4,639 km) with the
adjoining countries of China, Lao PDR and Cambodia.15 The significance of cross-
border transport can be viewed from both the regional and local perspectives. The
current initiatives for regional cooperation through the Association of Southeast
Asian Nations (ASEAN), Greater Mekong Subregion (GMS) and other bilateral
arrangements16 require the integration of transport networks and facilitation of
transport services, which are expected to expand with socio-economic activities of
the countries. The cross-border transport in Vietnam’s context is also important
from the rural development viewpoint because most of the defined corridors cover
rural and otherwise isolated mountainous areas where accessibility is extremely
poor and poverty prevails. The main issues in cross-border transport include (1)
Limited and uncertain traffic levels: cross-border flows are very limited and vary
significantly; (2) Limited physical infrastructure: the access links have inadequate
capacity, especially for long distance transport. Border facilities are also lacking;
(3) Institutional bottlenecks: bilateral rules and regulations hinder transport
development, such as through movement of vehicles between countries.
Multimodal Transport
Seamless transport services at reasonable cost to make the transport sector more
competitive has become an increasingly critical objective, both for international
and interprovincial transport of goods. The multimodal transport concept is being
recognized as important in Vietnam but services are still very much constrained
due to various factors such as (1) Lack of guaranteed scheduled services: there
are no scheduled services on trunk modes such as coastal shipping and the
railway which allow predictable delivery times of shipments; (2) Lack of cargo
information systems: no transporters can yet offer information about the
whereabouts of the customers' cargoes at any particular time; (3) Lack of modern
cargo handling methods: the lack of facilities for handling containers and pallets
hinders development of effective links between modes; (4) Poor access links to
ports: access roads to new ports are not completed on time and there are
restrictions on truck movements through cities and over weak bridges; (5) Physical
constraints on containerization: there are few roads designed for carrying
container trucks. Any container truck needs special authorization for operation
because it just exceeds the legal height limitation; (6) Bureaucratic bottlenecks:
customs procedures prevent multimodal operators from acting on the customer's
behalf. Procedures are not designed to enable efficient transport and clearance;
(7) Lack of legal framework: there is no legal basis for multimodal transport; (8)
Need to attract foreign investment: the country needs to exploit opportunities for
15
Six, ten and eight Vietnamese provinces share the border with China, Lao PDR and Cambodia,
respectively.
16
ASEAN promotes the ASEAN Highway and Singapore-Kunming Railway Projects. The GMS scheme
focuses coordinated development in the subregion (Cambodia, Lao PDR, Myanmar, Thailand, Vietnam
and the Yunnan Province of China) including east-west corridors.
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tapping foreign investment in new facilities and services, but there are restrictions
on foreign investment.
Sector Management
Various subsector issues mentioned above are not specific to particular

subsectors but require a sector-wide approach. Key transport sector management
issues, among others, include (1) Weak management: decision-making is slow or
ineffective because of overcentralized organizations, overlapping or unclear
responsibilities, lack of guidance documents and procedures, and lack of reliable
information for monitoring policy implementation; (2) Need to divest remaining
commercial functions: although much has been achieved, there remain many
commercial activities within agencies responsible for regulatory oversight
(transport services and support functions); (3) Lack of trained staff and training
policies: more staff trained in specialist/technical fields are required, and decision-
makers need to be able to interpret technical information given to them. Existing
staff need training in new management systems and procedures. The MOT has
yet to identify specific training strategies and programs; (4) Inadequate level-
playing-field and basis for cost recovery: the transport regulations do not yet
provide a basis for effective competition between or within modes. Charges paid
by users do not always cover costs of infrastructure and there are distortions
caused by price controls and other government interventions (some of which deter
competition and private involvement in the transport sector); (5) Slow pace of SOE
reform: although government gives high priority to equitization, little progress has
been made; (6) Need to generate new revenue sources: to fund the development
of infrastructure and investment in transport equipment new sources of investment
funds are required.
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4 CONTEXT OF THE TRANSPORT SECTOR
National Development Goals
In the process of development, Vietnam will encounter drastic internal and external
changes. Urbanization17 will accelerate as the economy grows and diversifies.
Constraints in increasing agricultural productivity will drive urban migration.
Globalization of the economy and information and socio-cultural exchanges are
inescapable. Their impact will be significant and advantageous to the country, if
adequately managed. Technological development, which has been taking place all
over the world, will likewise affect both the country’s economic and industrial
sectors in many ways.
The transport sector is a key component of national development and a strategic

means to support and facilitate socio-economic development at different levels,
from the national to the local - that is, the community. Thus the transport sector
should be an integral part of the national development framework and strategies,
which are the starting points of the VITRANSS. The current national development
goals are briefly as follows:
• Economic Growth: Lessons from past experiences of the country as well as

those of others indicate that sustainable economic growth is the most critical
basis of a country’s socio-economic development. Achieving a high, sustainable
rate of economic growth with increasing economic efficiency is thus targeted.
• Industrialization and Modernization: Sustainable economic growth is achievable
only when the multisectoral market economy is continuously developed in
association with further industrialization and modernization of industries and
economies, and the resultant increase in productivity.
• Poverty Alleviation: The incidence of poverty in the country is still high and will
not decline quickly in spite of the significant economic growth expected in the
future. Poverty in Vietnam is much more significant in rural, especially remote,
areas than in the cities.
• Equity: Since major infrastructure is concentrated in a few locations, mostly the
south and north growth areas and partly in the central region, promoting the
harmonious economic development of all regions is a primary policy issue of
the government.
• Financial Sustainability: At present, many development projects rely on ODA for
funding due to the lack of local financing capability. Market mechanisms are yet
to function efficiently, and costs of services and products are often not properly
paid for by users or beneficiaries. National savings have to be increased to
establish the preconditions for a more sustainable and rapid development in the
next era.
17
Urbanization level (% of urban population to total population) of Vietnam is still very low (23.3%) compared
to other countries in southeast Asia.
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Regional Development Framework
Regional Development Trend and Policy: In general, industrialization and

urbanization are expected to be at the forefront of the development process. The
agricultural sector is expected to grow. With increasing mechanization, the sector
is expected to require less labor. Displaced workers can then be reemployed in the
secondary and tertiary sectors. The plan’s targets require the mobilization of
domestic and foreign savings and are conditional on major achievements in
human resource development to provide a workforce with the necessary skills to
meet the demands of an industrializing economy.
The economic growth of the country still differs considerably by region. The south
is the fastest growing, followed by the north and then central Vietnam. This trend
has continued for more than a decade. Regional disparities have not been
narrowed; they have even increased between urban and rural areas.
Consequently, the disparity between urban areas of fast-growing regions and rural
areas of mountainous regions has widened.
To bridge this gap and to meet the long-term development goals of

industrialization and modernization, the government’s five-year plan (1996 – 2000)
has laid out a number of broad objectives, as stated in the previous section.
Moreover, an increasing number of programs have focused on rural development
and poverty alleviation.
Regional Development Perspective and Framework for the VITRANSS: The

national and regional development policy has been interpreted in terms of
population, urbanization level and gross regional domestic product (GRDP) and its
sectoral composition and industrial outputs by major commodity groups at regional
and provincial levels. This regional development perspective provides a basis for
projecting transport demand and developing a transport plan. The consequences
of the planned socio-economic development in Vietnam during the next two
decades (1998/9 – 2020) are summarized as follows:
• Population will increase from 76 million to 110 million (1.4 times).

• GDP will increase from VND 264 trillion to VND 885-1.144 trillion (3.4-4.3 times).
• Per capita GDP will increase from VND 3.2 million to VND 8.0 million - 10.4
million (2.5 - 3.2 times).
• The percentage of urban population will increase from 23.3% to 32.5%.
• Industrialization will make further progress and industrial outputs, such as steel,
cement, fertilizer, and manufacturing goods, will increase significantly (about
five times).
• Foreign trade will increase substantially (2.3 to 2.9 times).
These overall changes will affect the entire country. It is expected that regional
development objectives, with special attention to narrowing regional disparity and
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alleviating poverty in rural areas, will be properly attended to in the process. In this
context, the VITRANSS briefly describes the future traffic scenario, thus:
• Social and economic expansion will considerably intensify traffic demand

throughout the country and probably spawn various traffic services. Under
constant urbanization trends, traffic demand will further increase. Seasonal
traffic fluctuations will become less significant as the society becomes less
agriculture-based. Passengers will require faster and more comfortable
transport services in line with increasing incomes.
• The government’s decentralization policy aims at equitable growth and

balanced urbanization among the regions. While it is expected that the number
of large cities with more than 500,000 people will increase from four to 10 by
2020, it is an important strategy that subordinate urban centers are developed
in a hierarchical and integral manner to support rural development. The
development of strategic growth belts, including Ha Long-Hai Phong-Hanoi-Vin,
Hue-Danang, and Vung Tau-Bien Hoa-HCMC-Can Tho, will be accelerated.
However, the benefits from these developments must be felt by the rest of the
country, particularly through an integrated transport network and services
across the country.
• In spite of the expected growth, poverty will remain. In 1990 urban incomes on
average were five times higher than rural incomes, rising to eight times in 1997.
In order not to widen such urban-rural disparity, rural transport should be
strengthened to ensure market access, enhance agricultural productivity and
encourage off-farming activities.18
• Industrial powerhouses will be scattered all over the country, reflecting

Vietnam’s extensive reservoir of rich mineral resources and some political
decisions on the choice of their locations. For example, coal and refined oil
products will be transported mostly from the Quang Ninh coalfields and the Dung
Quat oil refinery plant, respectively, to consumption places nationwide. Cement
and fertilizer products will mainly be produced in the north due to the area’s rich
mineral resources, while large urban economies will supply diverse manufacturing
goods. To connect production and consumption areas, long-distance haulage will
inevitably be needed. If these transport services cannot be provided sufficiently at
economical prices, imported goods may easily substitute for local ones.
18
According to the World Bank’s analysis, in Vietnam about 90% of the poor live in rural areas and only 30%
of them depend solely on farming for their livelihood. It also indicates that those who have access to all-
weather roads have relatively higher living standards than those who have none.
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Table 4.1
Growth of Population and GDP
1999 2010 2020

Million
Population 76.3 94.5 109.5
(Index)
(100) (123) (143)
GDP High Case 598 1144
(VND trillion at (Index) 264 (227) (433)
1994 price) Low Case (100) 531 885
(Index) (201) (335)
Transport Demand – Present and Future
Overall Demand Growth: In 1999 interprovincial passenger transport demand

was about 219 million passengers (0.6 million a day) or 58.4 billion passenger-km
(160 million a day) and is projected to grow by 1.8 times and 3.3 times in 2010 and
2020, respectively. The total volume of interprovincial cargo estimated at 89 million
tons in 1999 will grow by 1.9 times and 3.1 times in 2010 and 2020, respectively.
Since average transport distance will increase, cargo transport demand will
become nearly five times more in 2010 in terms of ton-km. Major cargo items
currently transported are rice/paddy, construction materials, coal, petroleum, and
manufactured goods. Demand will increase especially for rice/paddy, steel,
cement, fertilizer, petroleum, and manufactured goods.
Figure 4.1
Growth of Future Transport Demand
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Figure 4.2
Growth of Cargo Transport Demand by Type
Source: VITRANSS
International Transport Demand: International movement of goods and

passengers will also increase. International passenger transport demand of 24
million in 1999 will increase to more than 50 million in 2020, wherein the share of
air will increase from 10% to 23% to 29% during the period. Foreign trade, which is
composed of export, import and transit/transshipment, will also increase two or
three times.
Table 4.2
Summary of International Traffic
1999 2010 2020

1. Passengers
− Total number (million) 24 34-36 51-56
− Modal share (%) by land 90 77-80 71-77
by air 10 20-23 23-29
2. Foreign Trade
− Total tonnage (million) 41 55-59 96-119
Export 21 31 46-50
Import 17 19-22 42-60
Transit/Transshipment 3 5-6 8-9
− Modal share (%) by land 18 20 23
by sea 82 80 77
Source: VITRANSS
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Transport Demand on the Network: At present, traffic movement is significant in

radial directions centered on HCMC and Hanoi within the delta areas. However,
the north-south movement between HCMC and Hanoi, which is not substantial at
present, will become more significant in the future. In the case of cargo transport,
the inland trunk road or HCM highway, will also contribute to this north-south
movement. As it is expected that the transport distance of cargo will increase in
the future, the share of coastal shipping, mainly for bulk cargo, will increase
significantly. Railway will likewise become more important in cargo transport. As
road development progresses, inland waterway transport will, increasingly, cater
mainly for intraprovincial transport needs.
Figure 4.3
Passenger Flow by Surface Mode
Source: VITRANSS
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Figure 4.4
Cargo Transport by Road
Source: VITRANSS
Figure 4.5
Cargo Transport by Rail, Inland Waterway and Coastal Shipping
Source: VITRANSS
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Available Funding Resources for the Transport Sector
Investment in the transport sector has been about one-fourth of public investment
in recent years or about 1.8% of GDP. Although it has been advocated that
transport sector investment should be 3% of GDP 19, this is quite unrealistic, since
most investments in transport infrastructure have been funded so far by official
development assistance (ODA). It is unlikely that ODA will grow further, partly due
to the economic situation of donor countries themselves and partly because self-
financing is expected to grow in Vietnam.
Based on the GDP projected by the VITRANSS, the possible investment amount
was estimated for the following cases:
Case 1: 1.8% of GDP is continuously invested in the transport sector

The estimated amount likely to be available for the transport sector from the
government ranges between US$ 23 billion and US$ 45 billion for the next two
decades (see Table 4.3). For the VITRANSS, Case 2 is assumed to be the most
likely case which indicates that about US$ 12 billion will be available for the Master
Plan period.
Table 4.3
Estimate of Possible Investment in the Transport Sector
US$ billion
1/ 1/
Case 1 : Case 2 : Case 31/:
Period 1.8% of GDP 2.5% of GDP 3.0% of GDP
High Low High Low High Low
2001-2005 3.7 3.5 5.1 4.9 6.2 5.9
2006-2010 5.4 4.9 7.5 6.8 8.9 8.1
Subtotal 2001-2010 9.1 8.4 12.6 11.7 15.1 14.0
2011-2020 18.0 14.7 25.0 20.5 30.0 24.5
Total 27.1 23.1 37.6 32.2 45.1 38.5
Source: Estimated by the VITRANSS
1/ “High” and “low” refer to high and low GDP growth rates assumed in the Study.
19
The scale of public funding in terms of GDP spent on the transport sector in 1996 is as follows: Brunei
Darussalam (2.9%), Malaysia (2.4%), Myanmar (2.3%), Philippines (2.0%), and Thailand (7.3%) (ASEAN
Secretariat).
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Environmental Considerations
Environmental issues are becoming more and more critical in economic and social
development. In the VITRANSS, these issues are assessed by subsector from the
viewpoint of natural and social environments.
Environmentally critical areas in Vietnam are briefly as follows:

• Landslide-prone areas are widely distributed in hilly and mountainous regions of
Vietnam. Particularly in the northern mountainous provinces, careful
assessment is needed before implementation of projects because of the
presence of many faults that may be activated when earthquakes occur.
• Flood-prone areas are the Red River delta, Mekong delta and some coastal
areas. The latter are also sometimes seriously affected by storm surges.
Transport infrastructure in these areas must not be prone to damage by water.
At the same time, it must not hinder water flow. Particularly in the deltas, road
projects need to be integrated with flood protection projects.
• Along the coastline of Vietnam, lagoons and tidal marshes are widely distributed.
These areas, which often include mangroves, are ecologically precious.
Transport projects, particularly ports, should not adversely impact on these
areas. Hence, a proper assessment must be conducted prior to implementation.
• Areas of natural and historical importance, such as those identified as World
Heritage sites (Ha Long Bay, Hue, My Son, and Hoi An), and the ancestral
domain of cultural communities should likewise be protected and conserved.
Other aspects considered are the impacts on the social, natural and living
environments. The social environment involves issues concerning resettlement of
inhabitants, economic activities, impacts of traffic and public facilities, community
disruption and severance, historical and cultural property, water rights and
commons, public health, wastes and hazards. The natural environment involves
issues concerned with topography and geology, soil erosion, underground water,
hydrological situation, coastal zone, flora and fauna, meteorology and landscape.
Living environment includes aspects such as air pollution, water quality, soil
contamination, noise and vibration, and land subsidence.
4-9
Final Report
Summary
Figure 4.6
Environmentally Critical Areas in Vietnam
4-10
Final Report
Summary
5 LONG-TERM TRANSPORT STRATEGIES
Transport Sector Goals
The goal of transport sector development is to contribute to the realization of the

national development goals of economic growth, poverty reduction, safety
enhancement, environmental protection, and human resource development.
Transport sector policy should cover the following aspects: economic (contributing
to increases in GDP and consumer satisfaction), developmental (supporting
balanced developments), social (providing services to the poor), and
environmental (protecting and conserving the environment). All these aspects
must be considered in formulating a transport strategy. In addition to meeting the
above-mentioned national objectives, the transport sector of Vietnam aims at
strengthening regional integration within ASEAN and with China.20
When addressing long-term strategies, the starting point is to define Vietnam’s

future policy environment in which the transport sector will function. In accordance
with overall development policies, the focus will shift from direct public sector
management and funding to private sector skills and resources, supported by
public sector facilitation and procurement. The forms of intervention will change
from investment in projects to capacity building/institutional restructuring.
Development will involve policy reforms to create competitive markets and focus
public investment in strategic projects. Many policy-makers are all too aware of
this and are trying to remedy the situation. But it is recognized that the current
implementation of needed reforms is not satisfactory. Ideally, the policy goals and
objectives of the transport sector should transform the sector into one that should:
• be economical, wherein needs of transport users and consumers are satisfied
at least cost,
• be supportive of a balanced development across the country,
• ensure adequate accessibility to support socio-economic activities of the poor,
especially in rural areas,
• not adversely affect natural and socio-cultural environments, by providing
appropriate countermeasures when and where necessary to protect and
enhance these environments,
• facilitate regional integration envisioned and currently being promoted
internationally, especially within ASEAN and GMS.
Of the wide range of sector development objectives, the most critical aspect is to
meet the economic and social needs of society. The key objectives of transport
sector development are thus summarized in the phrase,
“Competitive Transport with Social Equity”.
20
Vietnam has entered into a number of bilateral and multilateral agreements with these countries to facilitate
the transport of goods and people across borders.
5-1
Final Report
Summary
Transport Sector Objectives and Strategies
The transport sector objectives and strategies need to be developed in a way that
is consistent with overall macro-economic policies and constraints.
The major issues, policies and strategies that need to be addressed for the
transport sector in Vietnam can be categorized into four aspects, namely: (1)
operation and management, (2) infrastructure, (3) institutional/competitive
framework, and (4) funding. The strategies required to meet the policy goals and
objectives described above are summarized as follows:
Table 5.1
Transport Sector Objectives and Strategies
Objectives • To meet the needs of transport users at minimum cost

Operations/Management
• To provide accessible, safe and affordable transport services, especially for the
poor
• To reduce transport accidents and adverse environmental impacts
• To modernize transport technology and operating techniques
Strategies • Equitize operator SOEs and increase efficiency of remaining SOEs to foster
competition
• Facilitate entry by new (private sector) operators and use of modern
technology/operating techniques
• Provide training in business skills for transport sector industries
Objectives • To establish a competitive and efficient national primary/ secondary transport
network with links to rural areas and international gateways
Infrastructure
• To establish an effective tertiary/rural road network to provide access to the main

network
Strategies • Complete rehabilitation programs of the main transport network and tackle
maintenance backlog
• Upgrade the main network in a hierarchical and integrated manner
• Improve rural transport infrastructure where economically/socially beneficial
• Construct new expressways and strategic links/nodes where justifiable
Objectives • To establish a regulatory framework to give a level playing field, with adequate
Institutional/Competitive Framework
safety and environmental safeguards

• To establish the sector’s administrative capacity at national/local levels,
especially for infrastructure management
• To promote private sector capacity building and participation
Strategies • Implement legal framework with clear, justifiable, enforceable rules
• Develop and implement economic pricing and cost recovery policies
• Develop justifiable safety and environmental programs, and means for their
enforcement
• Remove unnecessary barriers to competition
• Strengthen infrastructure management systems to promote decentralization, to
divest commercial functions and to strengthen human resource development
• Define human resource development policies and strategies for the transport
sector (based on increasing training incentives and opportunities) and implement
them
• Provide training in key management and technical fields
• Improve construction services by raising standards and improving competition
Objectives • To establish a sustainable funding mechanism for infrastructure (especially for
maintenance) that is supported by transport users
Funding
Strategies • Develop sustainable funding for infrastructure maintenance (improved budgeting

systems and dedicated funds)
• Provide domestic credit sources for the private sector
• Sustain/expand ODA funding
• Develop own fund sources
5-2
Final Report
Summary
Subsector Strategies
For each subsector, more specific long-term objectives and strategies are defined
based on the overall transport sector objectives and strategies for each of the four
aspects: operation/management, infrastructure, institutional/competitive framework
and funding.
Table 5.2
Road Subsector Objectives and Strategies
Objectives • To promote competitive and affordable transport services

• To provide minimum accessibility levels for the poor

• To reduce the number and cost of road accidents
Strategies • Equitize bus and truck SOEs to foster competition

• Promote higher professional standards and training of bus and truck operators through
voluntary accreditation schemes
• Develop and implement road safety programs
Objectives • To establish a reliable national backbone network of main roads

• To improve/develop the rural road network
Infrastructure
• To establish an effective provincial road network connecting national and rural road
networks
Strategies • Complete rehabilitation of main/secondary network
• Complete the primary/secondary network
• Accelerate tertiary/local road development
• Prepare appropriate design standards and construction methods
Objectives • To strengthen road administration capacity at national/local levels
• To establish a competitive environment to promote efficient and high quality services

• To set and enforce justifiable minimum safety and environmental standards
Strategies • Implement legal framework with clear, enforceable minimum standards without other
regulatory obstacles
• Strengthen national/local road planning and maintenance systems
• Provide training in road maintenance management systems, contracting and other
business skills
• Set higher standards and improve competition in the construction industry
Objectives • To establish a sustainable funding mechanism for road maintenance and development
that is supported by road users
Funding
Strategies • Sustainable funding for road maintenance (better budgeting and road fund)
• Sustain ODA funding
• Expand and facilitate access to credit sources by the private sector
5-3
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Summary
Table 5.3
Railway Subsector Objectives and Strategies
Objectives • To increase efficiency and service level for core traffic (bulk)
• To develop new markets (such as container services)
Strategies • Rehabilitation and replacement of rolling stock to sustain the carrying

capacity for core traffic
• Acquire improved rolling stock where required for new services
• Improve railway operation, facilities and equipment as well as human
resources
Objectives • To sustain the main lines as part of the backbone of the overall
transport network
• To extend the network to integrate with main ports/traffic generators,
where justified
Infrastructure
• To clear bottlenecks in urban areas

Strategies • Continue to rehabilitate critical infrastructure to sustain operations
• Rehabilitate/improve the main network in accordance with economic
priority
• Rehabilitate secondary lines where justified
• Improve critical sections in Hanoi and HCMC
• Develop main freight stations and other infrastructure
Objectives • To commercialize the railway and make it more market-oriented
• To increase competition within the railway and the transport sector
Strategies • Establish railway as a business corporation, divesting itself of

peripheral units
• Prepare realistic business plans for passenger and freight businesses
• Implement management systems (especially information systems,
costing and bases for payment of infrastructure and workshop
services)
• Provide training in modern railway management methods
• Establish railway inspectorate in the MOT to oversee railway safety
and implement the railway act/regulations
Objectives • To establish incentives for increased management performance and
self-finance except for specific subsidies
Funding
Strategies • Establish a performance agreement between railway and government

giving clear rights and obligations with a predictable financing
mechanism
• Agree to long-term plans for performance and investment
• Encourage increased ODA funding
5-4
Final Report
Summary
Table 5.4
Inland Waterway Subsector Objectives and Strategies
Objectives • To promote competitive and affordable transport and port services

• To improve productivity in transport and port operations

• Reduce number and cost of accidents
Strategies • Equitize inland waterway transport SOEs to foster competition and
investment in larger, modern vessels
• Commercialize port management
• Implement modern services including container service
• Develop and implement safety programs
Objectives • To establish a clearly defined international/interprovincial waterway
Infrastructure
network
• To establish a sustainable secondary and local waterway networks
integrated with the main transport network
Strategies • Complete rehabilitation of main rivers
• Rehabilitate the rural network
Objectives • To establish inland waterway transportation administration capacity at
national/local level
• To encourage a more active participation of the private sector

• Ensure safe navigation particularly along major routes
Strategies • Implement legal framework (including enactment of IWT act), improve
vessel inspection and remove regulatory obstacles
• Strengthen national/local waterway planning/maintenance system with
clear separation of responsibilities for inland water and maritime
transport
• Provide training in maintenance management, contracting and other
business skills
• Complete equitization of construction/maintenance SOEs and improve
contracting procedures
• Establish a mechanism for dialogue with the private sector such as a
Lighters Association
Objectives • To establish a sustainable funding mechanism for waterway
maintenance and development, supported by waterway users as
appropriate
Funding
Strategies • To develop sustainable maintenance fund with cost-effective revenue

collection
• Encourage private funding of container port facilities
• Sustain ODA funding
5-5
Final Report
Summary
Table 5.5
Maritime Subsector Objectives and Strategies
Objectives • To promote a competitive, efficient Vietnamese shipping industry

• To improve efficiency and services of ports and support services
• To reduce number/cost of accidents and risk of oil spills and other adverse
environmental impacts
Strategies • Commercialize and, eventually, equitize coastal shipping SOEs to foster
competition
• Corporatize ports as independent entities, with increased local representation
on management boards, to increase competition within and between ports
• Improve general/specialized cargo handling
• Expand and improve port facilities and international/domestic container liner
shipping for container transport
• Promote multimodal and specialized transport (bulk)
• Commercialize and equitize shipbuilding and repair yards
• Provide training in business skills and modern methods of cargo handling
• Develop and implement safety and environmental programs
Objectives • To develop the port system in a hierarchical manner to provide adequate
capacity
Infrastructure
• To develop competitive gateway ports to strengthen port linkages with the

global market
Strategies • Increase capacity utilization of existing ports through rehabilitation, upgrading
and more efficient handling methods / equipment / management
• Develop new port capacity in accordance with demand including 3 gateway
ports in the north, central and south and 8 major general ports
Objectives • To strengthen administrative capacity to plan, to manage infrastructure and to
set and enforce safety and environmental standards
• To introduce a market-based port regulatory system that encourages efficiency
and private sector participation

Strategies • Strengthen VINAMARINE’s capacity to monitor the subsector (capacity
utilization, competition and infrastructure plans based on user needs and
overall development costs)
• Strengthen VINAMARINE’s capacity to monitor infrastructure condition and
plan infrastructure maintenance, based on clear separation between inland
water and maritime responsibilities
• Strengthen the roles of the Vietnam Ports Association and Vietnam
Shipowners Association
• Divest VINAMARINE of the remaining ports and other commercial functions
• More port autonomy (port charges) subject to strict financial and performance
targets
• Continue to incorporate international agreements into maritime law
• Improve port state control inspection standards
• Provide training in infrastructure management methods and regulatory
techniques.
Objectives • To broaden the options for port funding by tapping private and other sources
• To develop a seaworthy and competitive Vietnamese fleet
Funding
Strategies • Encourage private funding of container port facilities and operations

• Provide financial support to facilitate fleet modernization and expansion
• Sustain ODA funding and develop own fund sources
5-6
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Summary
Table 5.6
Aviation Subsector Objectives and Strategies
Objectives • To strengthen Vietnamese airlines and make them competitive under a more
liberalized environment
• To improve efficiency of airports and support services
Strategies • Promote increased independence of VAC member airlines

• Commercialize and corporatize airports to encourage delivery of better
services
• Promote increased competition in the supply of support services
• Provide training in business skills
Objectives • To develop the airport system in a hierarchical manner to provide adequate
capacity
• To develop the air traffic control system using modern technology that meets
Infrastructure
international requirements
Strategies • Increase the capacity of and rehabilitate main airports
• Encourage coordination of military and civil airport planning
• Develop air traffic control system in priority areas
• Install new CNS/ATM equipment
• Develop capacity of secondary airports, where economically justifiable
Objectives • To strengthen administrative capacity to plan, manage the infrastructure and
regulate the subsector

• To enhance air traffic safety and environmental standards
• To establish a more liberalized fare system to balance supply and demand
effectively
Strategies • Strengthen CAAV capacity to plan and evaluate infrastructure development
based on user needs
• Divest commercial functions of CAAV, giving more autonomy to airports in setting
airport charges but stricter performance targets
• Review international technical and regulatory standards and incorporate these
into Vietnamese practice
• Remove fare control and give greater freedom to airlines to develop market-
based fares
• Provide training in planning and use of modern technology
Objectives • To broaden the options for airport funding by tapping private and other
sources
• To promote Vietnamese/foreign partnerships to increase finance and transfer
of know-how
Funding
Strategies • Ensure full cost recovery (including full financing costs) from user charges
and remove discounts to Vietnamese airlines
• Allow foreign funding of airline businesses
• Encourage private funding of airport terminals/facilities
5-7
Final Report
Summary
Table 5.7
Multimodal Transport Subsector Objectives and Strategies
Objectives • To provide shippers with high-quality, door-to-door transport services

required for future distribution systems

Strategies • Develop freight forwarders, warehousing agents and other
intermediaries /consolidators
• Foster a shippers’ council and operator associations
• Introduce guaranteed scheduled services for small consignments using
larger specialized vehicles/vessels
• Introduce cargo information management systems
• Provide training in business skills and logistics methods
Objectives • To remove bottlenecks in distribution systems which prevent reliable
and timely services at low costs
Infrastructure
Strategies • Introduce modern cargo-handling methods at ports, terminals and

warehouses for smooth intermodal transfers
• Improve access links to ports and productions sites (especially
container movement)
• Develop new specialized port facilities
Objectives • To establish the legal framework for multimodal operations and
management
• To complete the legal framework for each mode

• To remove legal obstacles affecting transport services
Strategies • Establish the legal framework for freight carriage (limits of liability, legal
basis for multimodal transport operators or MTOs, and freight
forwarders to act as principal carriers rather than mere agents) based
on international standards
• Reform customs regulations to allow modern clearance systems using
clearing agents in ports and at authorized inland depots
• Accede to major international agreements on trade and transport and
incorporate these into Vietnamese law
• Provide training in multimodal operations and regulations
• Remove restrictions on foreign investment in transport
Objectives • To broaden the options for port funding by tapping private and other
Funding
sources
Strategies • Encourage private funding of container ports and inland depots by
providing support infrastructure such as land and good access links
5-8
Final Report
Summary
Evaluation of Modal Balance
While the transport sector in Vietnam consists of the full range of transport modes,
a critical planning issue is finding the appropriate balance among these modes.
This is not an easy task because the ability and performance of transport modes
are affected by a number of parameters including infrastructure, equipment,
operation, etc. Nevertheless, an exercise was conducted to test relative changes
in overall transport costs by analyzing various scenarios for the future modal
composition of the national transport network. In the analysis the total transport
cost was calculated as the sum of the operating cost of transport equipment, time
cost of passenger and cargo, loading/unloading and transshipment of cargo, and
construction and maintenance cost of transport infrastructure.
The results of the analysis, though based on assumptions, indicate that if the
current trend in modal split continues, the overall transport network would not be
economical. From the economic viewpoint, the availability of competitive services
in coastal shipping, railway and inland waterway is critical. This does not mean
unlimited expansion of such modes but, rather, suggests the need for an adequate
balance of the three modes. The recommended strategy is to facilitate the shift
from road. The role of inland waterway in interprovincial transport will be less
significant in the future though remaining important for intraprovincial transport
(see Table 5.8).
Table 5.8
Estimated Overall Transport Costs and Modal Shares (Freight) by Case
Annualized Overall Modal Share in Cargo Transport

Transport Cost1/ by Ton-Km (%)
Index Inland
Case Year (US$ b Coastal
(Economic) Road Water- Rail Air
illion) Shipping
= 100 way
1. Present2/ 1999 5.0 - 43 18 6 33 0
2. Do-nothing3/ 2020 27.3 229 43 7 13 36 1
3. Most Economical4/ 2020 9.7 82 13 11 12 64 0
4. Economic5/ 2020 11.9 100 24 9 19 48 0
5. Base6/ 2020 16.8 141 71 6 6 17 0
6. Target7/ 2020 14.5 122 48 7 12 33 0
7. Road Only8/ 2020 18.5 155 57 3 7 32 1
8. Inland Water Only9/ 2020 21.5 181 34 11 11 42 2
9. Rail Only10/ 2020 21.7 182 30 6 36 27 1
10. Coastal Shipping Only11/ 2020 21.1 177 34 7 9 49 1
Source: VITRANSS
1/ Construction cost is estimated yearly over 30 years at 12% p.a.
2/ Present: Actual 1999 traffic demand on the existing network.
3/ Do-nothing: 2020 demand on the existing (1999) network.
4/ Most Economical: 2020 demand, 100% on the most economical mode (route).
5/ Economic: 2020 demand, assigned in inverse proportion of cost to available modes (routes).
6/ Base: 2020 demand, assigned according to present shares by OD pair.
7/ Target: 2020 demand, mixture of ½ Economic Case and ½ Base Case.
8/ Road Only: 2020 demand, the same as the Economic Case limiting new investments to roads only
9/ Inland Waterway Only: 2020 demand, limiting new investments to inland waterway only.
10/ Rail Only: 2020 demand, limiting new investments to rail only.
11/ Coastal Shipping Only: 2020 demand, limiting new investments to coastal shipping only.
5-9
Final Report
Summary
Overall Network Development
Planning Considerations: A long-term transport network plan provides a useful

basis to guide infrastructure investments in a coordinated and integrated manner.
In formulating the overall network structure and the estimated future demand, the
following factors were duly considered:
− All growth centers, production areas, communities, and other activity centers
should be provided with adequate transport infrastructure and services.
− To maximize infrastructure capacity, the transport network should be planned
with a clear hierarchy, making use of the existing network and facilities to meet
future demand effectively and economically.
− Intermodal connection should be assured through infrastructure and institutional
arrangements to facilitate the smooth transport of goods and people.
− International linkages with global markets and adjoining countries should be
strengthened.
− Growth belts in the north, south and central part of Vietnam should be provided
with strategic transport infrastructure.
− Other factors, such as environmental and geographical characteristics, should
be properly incorporated into the plan.
Hierarchy of Transport Network
The expected roles of transport modes at different levels of the hierarchy are
briefly explained as follows:
− International Gateways: Airports and ports will function as major international

gateways for passenger and goods movement, whereas railways, roads and
inland waterways will provide international transport linkages with neighboring
countries to a lesser extent. Three ports and three airports in the north, center
and south will function as international gateways. Minor cross-border corridors
will also supplement international transport.
− International linkages with global markets and adjoining countries should be

strengthened.
− Growth belts in the north, south and central part of Vietnam should be provided
with strategic transport infrastructure.
− Other factors, such as environmental and geographical characteristics, should
be properly incorporated into the plan.
5-10
Final Report
Summary
− North-South Backbone: How to establish/strengthen the north-south transport

corridor is the next key concern in planning. The four modes of air, maritime, rail,
and road will share the responsibility of strengthening this transport backbone.
− Links with Strategic Transport Nodes/Traffic-generating Sources: Road,

rail and inland water links should be integrated with international airports, ports,
goods distribution centers, railway terminals, etc.
− Interface between Inter-city and Intra-urban Network: Expanding and

growing metropolitan areas, particularly in HCMC and Hanoi, require effective
and integrated inter-urban and intra-urban networks, especially rail and road.
− Secondary Network: The above primary network should be further

supplemented and strengthened with strategically configured secondary
network. A general guideline at this level of transport network is to link at least
the provincial capitals and other strategic provincial centers with
primary/secondary roads.
− Tertiary Network: Although this level is not fully considered in the VITRANSS,
the needed function and planning guidelines will be studied based on a case
study of selected provinces.
Table 5.9
Expected Roles of Transport Modes in Vietnam
Inland
Hierarchy Air Maritime Rail Road
water
International üüü üüü ü ü ü
Interprovincial üü üü üüü üüü ü
Provincial - ü ü üüü üü
Local - - G üüü ü
Note: ü indicates degree of importance
Conceptual Long-term Transport Network Plan
On the basis of the foregoing discussion, a conceptual long-term transport network

plan has been formulated (see Figure 5.1). The network for transport modes is
basically classified into three levels: primary, secondary and tertiary. The primary
level is of national importance, whereas the secondary level integrates provincial
growth centers with the primary level. The tertiary level on the other hand provides
adequate accessibility to/from the remaining areas. The need for network
integration is among primaries of different modes, and among primary, secondary
and tertiary networks. The integrated network is composed of the following:
5-11
Final Report
Summary
< Port and Shipping >
Primary : Three port systems in the north (Quang Ninh-Hai Phong), the
central (Danang Bay) and the south (Saigon-Thi Vai-Vung Tau) to
function as international gateways
Secondary : Other ports under the MOT, including Cua Lo, Qui Nhon, Nha
Trang, Can Tho, My Thoi, and My Tho, to serve the regional
movement of goods and passengers
Tertiary : Other local ports to serve local needs
< Aviation >
Primary : Three international gateways in the north (Noi Bai), the central
(Danang) and the south (Tan Son Nhat) to link with major foreign
destinations
Secondary : Domestic/international airports with regional importance such as
Hai Phong, Hue, Can Tho, Lao Cai
Tertiary : Other local airports to serve various socio-economic and
administrative needs
< Railway >
Primary : North-south axis (Hanoi-HCMC), major international links and the

lines serving primary ports
Secondary : Lines to integrate major cities and secondary ports/airports
Tertiary : Other local lines
< Inland Waterway >
Primary : Waterways along the international rivers and directly related river
ports
Secondary : Waterways of regional importance and directly related river ports
Tertiary : Other local waterways and related river ports
< Road >
Primary : North-south national backbone, access to primary ports/airports,

strategic centers and major cross-border roads
Secondary : Roads linking primary roads with provincial capitals, major
ports/airports, activity centers, other transport terminals, other
cross-border roads, etc.
Tertiary : Roads which link district centers and other equivalent growth
centers with primary and secondary networks
Local : Other local roads which link communes
5-12
Final Report
Summary
Figure 5.1
Long-term Transport Network
5-13
Final Report
Summary
Corridor Development Strategies
Definition of Corridors: The overall future transport network for the country was
preliminarily planned based on future demand, taking into account the network
hierarchy and regional/international integration. The primary purpose of this
section is to look into the characteristics, constraints and potentials of selected
major corridors to define needed projects and policy recommendations that will
facilitate the smooth movement of people and goods along the corridors and
promote the effective use of infrastructure.
A total of 27 transport corridors have been identified for assessment with due
consideration of the following factors:
− The corridors are already recognized as primary transport routes.
− The corridors have strategic importance from national and regional
development perspectives and supported by existing government policies; and
− The corridors would have greater development potential if their accessibility
were improved.
For the identified corridors, existing conditions are described, future demand
analyzed, constraints and opportunities assessed and development strategies
identified, forming the basis of the projects that will be formulated.
Strategies for Priority Corridors: The selected corridors have been initially
assessed based on network analysis using the traffic assignment model. This
involved an estimation of the number of road lanes needed to meet additional
transport demand of interprovincial passengers and goods. Although the analysis is
made on a number of assumptions, the results will give anticipated capacity
constraints of and relative importance of the seven corridors, namely: North South
Coastal Corridor (Hanoi-HCMC), Hanoi-Hai Phong-Quang Ninh Corridor, Hanoi-
Ninh Binh/Nam Dinh Corridor, Hue-Danang-Hoi An Corridor, Nha Trang-Da Lat-
HCMC Corridor, HCMC-Vung Tau Corridor, and HCMC-Can Tho Corridor. Moreover,
even though all the identified corridors are important, the following deserve priority
attention:
1) North-South Coastal Corridor (Hanoi-HCMC) (Corridor No. 1): A long-term

goal for this corridor is to develop it into an efficient and competitive corridor
with a balanced modal share of various transport modes that will support
national economic activities and ensure north-south integration. Intermodal
coordination and integration should be carefully designed since four major
transport modes, namely, road, rail, shipping and air, operate in this urbanized
and densely developed corridor. The roles of each mode should be defined in
accordance with their service and target markets to ensure healthy,
competitive and complementary operation. This is exemplified in the situation
of railway where the demand forecast indicates that there is a potential for
expansion as long as it can provide competitive fares and quality services.
5-14
Final Report
Summary
Figure 5.2
Identified Major Transport Corridors
5-15
Final Report
Summary
The competitiveness of the transport sector also becomes critical at the

international level particularly within the context of globalization as well as
regional (ASEAN) and subregional (i.e., Greater Mekong Subregion, GMS)
economic integration.
In order to address current issues in line with long-term strategies, short to

medium-term strategies have also been laid out as follows:
(1) Enhancement of road safety and orderly road traffic

(2) Rehabilitation of the railway system
(3) Expansion of major general ports (mainly Hai Phong, Tien Sa and Saigon
River Ports)
(4) Expansion of primary airports (Noi Bai, Danang and Tan Son Nhat)
(5) Development of urban bypasses at critical city locations
(6) Improvement of railway operation
(7) Expansion of major general ports (mainly Cua Lo, Qui Nhon and Nha
Trang)
(8) Expansion of secondary ports (Cat Bi, Phu Bai and Nha Trang)
2) Hanoi-Hai Phong-Quang Ninh Corridor (Corridor No. 3): The corridor

should be more efficient and competitive to serve urban/suburban traffic as
well as international traffic linked with shipping and air gateways. This corridor
will have to deal with different types of traffic, i.e., efficient multimodal transport,
economical bulk transport, inter-city passenger traffic, tourist traffic and urban
transport. The proposed corridor development strategy is to modernize railway,
inland waterways and roads with minimum infrastructure investment to cope
with the dense and varied corridor traffic.
A suitable modal composition will be necessary to meet different traffic needs.

The railway should serve inter-city passengers and urban transport (to a limited
extent) and multimodal transport. Inland waterways, on the other hand, should
serve container or bulk transport and, to a certain extent, multimodal transport.
Roads should serve urban transport, inter-city passenger traffic, tourist traffic,
multimodal transport, and other short and small-consignment freight transport.
Long-term strategies involve the provision of internationally competitive

transport services that will further support industrial and urban development
along the corridor. Environmental impacts along coastal areas should be
seriously considered. Short and medium-term strategies would be as follows:
(1) Completion of ongoing road and bridge projects

(2) Enhancement of orderly traffic flow and road safety
(3) Rehabilitation of the existing two railway lines
(4) Expansion of gateway ports
(5) Expansion of river ports and improvement of inland waterways
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Summary
(6) Capacity expansion of the Hai Phong Line by double tracking and
electrification
(7) Promotion of multimodal transport mainly through road and rail, together
with gateway ports expansion and ICD construction
3) Hanoi-Ninh Binh/Nam Dinh Corridor (Corridor No. 4): The corridor should
be able to provide efficient and viable urban/suburban transportation services
of various modes that will support industrial activities. The long-term strategy is
to meet the growing demand for high-quality road and rail services. Short to
medium-term strategies are as follows:
(1) Rehabilitation of the railway, particularly between Hanoi and Phu Ly

(2) Expansion of river ports
(3) Improvement of inland waterways along the Day and Red rivers and
construction of the DNC (Day-Ninh Co) Canal
(4) Enhancement of traffic management and traffic safety
(5) Widening NH1 from 2-lane to 4-lane
(6) Improvement of intermodal connections
4) Hue-Danang-Hoi An Corridor (Corridor No. 18): The development goal for

the corridor is threefold. One is to integrate two separate urban areas and
strengthen the foundation for further socio-economic development in the
central region. Another is to offer attractive international transport gateways
through competitive shipping and air transport services. The third is to facilitate
the strengthening of north-south integration.
Long-term strategies should therefore include the removal of capacity constraints

at Hai Van Pass, through the provision of both road and rail tunnels, strengthening
of gateway ports and airport services, and promotion of an east-west land link with
neighboring countries. Short to medium-term strategies include:
(1) Construction of a shorter road tunnel in Hai Van Pass

(2) Expansion of Tien Sa Port with better road access
(3) Expansion of Danang Airport to meet increasing demand
(4) Rehabilitation of the railway
(5) Development of tourist road network in the area
(6) Construction of Lien Chieu Port
5) Nha Trang-Da Lat-HCMC Corridor (Corridor No. 21): This corridor is

expected to enable smooth land transport flows between HCMC and the
highlands, and at the same time serve as an alternative to NH No. 1. Due to
the corridor’s rough terrain, it will be difficult to meet future demand only
through road development. Moreover, the corridor should be efficiently
integrated with the north-south coastal corridor to share the demand between
them more effectively. This calls for the expansion of air service via Da Lat and
Nha Trang, and development of the shipping service, including containerized
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goods transport, via Nha Trang. Short to medium-term strategies include the
following:
(1) Rehabilitation and upgrading of existing roads

(2) Rehabilitation and improvement of existing airports
(3) Expansion of Nha Trang Port
(4) Modernization of goods transport
6) HCMC-Vung Tau Corridor (Corridor No.22): The role of this transport

corridor is very important. The city plan of HCMC involves expanding the urban
area across the Saigon River, in which case this corridor would become more
integrated with the total urban system. Developments have been taking place
along the Thi Vai River and a new gateway port is also to be located in Vung
Tau and/or Thi Vai. The long-term plan to develop a new international airport at
Long Thanh is also being considered. Moreover, it is likely that within a couple
of decades HCMC will become a mega city, with a population of 10 million
including those residing in adjoining localities. Under these circumstances, the
efficiency of industrial and urban activities in the area would be directly affected
by the quality and efficiency of transport infrastructure and services which are
duly addressed in the long-term strategies for the corridor. The provision of
modern gateway ports and airports integrated with road, expressway, rail, and
inland waterway services through containerization and multimodal transport,
and supported with information technology and institutional facilitation
measures, is a worthwhile target. Short to medium-term strategies include the
following:
(1) Strengthening of linkages between HCMC, particularly Saigon River ports

and industrial estates in Dong Nai and Vung Tau
(2) Opening of a new canal between Thi Vai River and Mekong delta,
bypassing Saigon River ports
(3) Railway capacity expansion in the HCMC-Bien Hoa section by double
tracking and electrification
(4) Commencement of a new deep-sea port construction with an ICD
7) HCMC-Can Tho Corridor (Corridor No. 24): Modal balance is the key to
solving future capacity constraints in the corridor. The potential role of inland
waterway for goods transport is highly important. Its potential capacity should
be tapped as far as possible to ease the load on the corridor.
This highly urbanized corridor generates large volumes of both interprovincial

and intra-provincial passenger traffic which cannot be met by inland waterway
but only by roads. However, widening and construction of new roads in the
corridor may encounter difficulties in acquiring right-of-way. Whereas road
expansion and expressway construction are inevitable, the extension of the
railway from HCMC to My Tho and farther, to Can Tho, should not be excluded
from future options. Short to medium-term strategies are as follows:
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(1) Construction of two bridges (My Thuan and Can Tho) to enable smooth road
traffic flow
(2) Modernization of inland waterways and river ports
(3) Road capacity expansion (NH50 improvement, expressway construction
between HCMC and My Tho)
(4) Promotion of reefer/container transport
Development Strategies of Other Corridors: Strategies for the development of

the remaining corridors are briefly as follows:
1) North-South Upland Corridor (Hanoi-HCMC) (Corridor No. 2): Although the

traffic demand forecast indicates that immediate capacity expansion is
unnecessary, the project is strategically important from the national
development viewpoint. In the long run, the corridor will be an alternative for
road users, particularly long-distance trucks which may choose this corridor to
avoid traffic congestion on the coastal corridor. Network integration with east-
west links and with NH1 is an important aspect of the strategy. Short to
medium-term strategies include the following:
(1) Rehabilitation at impassable sections

(2) Preparation of full-scale rehabilitation and upgrading works for sections
with corresponding traffic demand
(3) Network integration with east-west corridors
2) Hai Phong-Ninh Binh/Nam Dinh Corridor (Corridor No. 5): Development of

efficient and economical means of cargo transport is the main target for this
corridor, for which strategies are required for upgrading inland waterways and
roads, and for enhancement of transport safety.
3) Lao Cai-Lang Son-Quang Ninh Corridor (Corridor No. 6): The objective is
to ensure an all-weather road, passable throughout the year, providing farm-to-
market access for rural people, and business opportunities for urban industries.
Strategies include rehabilitation of existing roads to all-weather condition and
upgrading of existing roads to connect mountain provinces with each other and
to facilitate cross-border trade with China, where there is sufficient demand to
justify the investment.
4) Lao Cai-Son La-Ha Tay Corridor (Corridor No. 7): The objective is to provide
an all-weather road passable throughout the year, enabling farm-to-market
access for rural people and business opportunities for urban industries.
Tourism needs can be carefully incorporated into the development. Strategies
include rehabilitation of existing roads to all-weather condition and upgrading of
existing roads to connect mountain provinces with each other and to facilitate
cross-border trade with China and Lao PDR in accordance with the demand.
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5) Quang Ninh-China Corridor (Corridor No. 8): The objective is to develop a

road corridor providing Chinese tourists with good access to Ha Long, and
supporting cross-border trade. Strategies include improvement and
beautification of existing roads and upgrading of existing roads to international
standard.
6) Hanoi-Lang Son-China Border (Corridor No. 9): The strategy proposed for
the corridor is to use the existing infrastructure and facilities effectively through
rehabilitation, minor improvement, implementation of traffic safety measures,
and improved operation of railway.
7) Hanoi-Cao Bang Corridor (Corridor No. 10): The objective is to improve the
corridor in accordance with demand, with all-weather roads that are passable
throughout the year. Integration with rural roads is also an important
component of the strategy, to enhance the effects of the investment. Attention
must be paid to landslides, soil erosion, precious ecology and the vulnerable
communities living in rural areas.
8) Viet Tri-Ha Giang Corridor (Corridor No. 11): This corridor is an important
radial corridor in the north, linking hinterland provinces with the capital region.
The minimum requirement is providing all-weather road conditions. Further
upgrading will be in accordance with the demand. To maximize the investment,
network integration with tertiary and rural roads is required.
9) Hanoi-Lao Cai-China Corridor (Corridor No. 12): In view of the high cost of
road improvements, the corridor needs a balanced development among the
available modes, especially road and rail.
10) Hanoi-Dien Bien Phu-North Lao PDR Corridor (Corridor No. 13): The
objective is to ensure an all-weather road passable throughout the year,
providing secondary international linkage with Lao PDR and rural access to the
mountainous provinces. Strategies include rehabilitation of existing roads to all-
weather condition and upgrading of roads to improve rural access and to
facilitate cross-border movement with Lao PDR.
11) Vinh-R8-Lao/Vientiane Corridor (Corridor No. 14): Strategies include

rehabilitation and upgrading of existing roads to improve rural access and to
facilitate cross-border movement, rehabilitation and modernization of the
existing port and introduction of transport services of international standard.
12) Vung Ang-R12-Lao/Tha Khet Corridor (Corridor No. 15): The objective is to
ensure an all-weather road passable throughout the year, providing secondary
international linkage with Lao PDR and rural access to the mountainous
provinces. The terrain is highly mountainous at the Lao PDR border. Difficulties
include difficulties with construction works and environmental protection, and
the need to start developing the proposed new Vung Ang Port. However a road
improvement project has already commenced. Strategies include rehabilitation
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of existing roads to improve rural access and to facilitate cross-border

movement, and upgrading of existing roads depending on regional
development.
13) Dong Ha-R9-Lao/Savanakhet Corridor (Corridor No. 16): Strategies include

rehabilitation and upgrading of existing roads to promote cross-border trade
and to provide rural access to mountainous areas, upgrading of existing ports
and introduction of internationally competitive transport services.
14) Danang-R14B-14-40-Lao/Pakse Corridor (Corridor No. 17): Strategies

include rehabilitation of existing roads to improve rural access and to facilitate
cross-border movement, rehabilitation or upgrading of the existing gateway
port at Danang and upgrading of existing roads to introduce competitive
transport services.
15) Qui Nhon-R19-Central Cambodia Corridor (Corridor No. 19): Strategies

include rehabilitation of existing transport infrastructure to improve rural access
and promote cross-border trade, and upgrading of roads in accordance with
regional development.
16) Central Highlands-Nha Trang Corridor (Corridor No. 20): The objective is to
provide an efficient, all-weather road to serve vast agricultural areas planted
with industrial crops, and link them to Nha Trang Port. Strategies include
rehabilitation of existing transport infrastructure and upgrading of transport
infrastructure.
17) HCMC-Cambodia/Phnom Penh Corridor (Corridor No. 23): The objective is

to provide a multimodal, upgraded international transport corridor comprising
roads and IWT. Strategies include rehabilitation and upgrading of existing
roads and river ways, improvement of institutional arrangement for cross-
border movement and internationally competitive transport services.
18) Can Tho-Ca Mau Corridor (Corridor No. 25): The objective is to provide safe,
stable and efficient service by developing an all-weather, flood-proof transport
system. Strategies include rehabilitation of existing roads and waterways,
rehabilitation/improvement of ports (both for river and sea vessels),
improvement/upgrading of roads and ports, and intermodal integration.
19) Can Tho-R91-Cambodia/Sihavoukville Port Corridor (Corridor No. 26):

The objective is to promote rural development and cross-border trade between
Vietnam and Cambodia by providing an all-weather transport corridor.
Strategies include rehabilitation of existing transport infrastructure and
improvement of roads and waterways.
20) Cuu Long-Cambodia Corridor (Corridor No. 27): The objective is to

develop an international waterway providing safe, stable and economic
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transport of goods. Strategies include rehabilitation and improvement of

major river ports and waterways, upgrading of ports and waterways
according to demand, and development of river ports as points for modal
integration, with appropriate institutional arrangements.
Strategies for North and South Growth Zones

The corridor approach has been further refined for the growth zones in the north
and the south. For these areas, it is expected that further exploitation of possible
interaction between corridors will enhance their development potential as
explained below.
Northern Growth Zone: At present, the growth triangle refers to the area
enclosed by Hanoi, Hai Phong and Quang Ninh. However, there is another growth
corridor towards the Ninh Binh/Nam Dinh areas. By strengthening the link between
Ninh Binh/Nam Dinh and Hai Phong/Quang Ninh, the area of the growth triangle
will expand. The growth zone would be provided with multimodal transport
including roads, rail, inland waterway, coastal shipping, maritime shipping, and air
transport. For the zone to be competitive it is critical that efficient, deep-water port
facilities are available, with good intermodal connections (see Figure 5.3).
Southern Growth Zone: Similar to the north’s traditional concept of growth

triangle is the area bordered by HCMC-Bien Hoa and Ba Ria-Vung Tau. The
HCMC-Can Tho corridor is regarded as a separate growth area. However, this
triangular development, is likely to accelerate the heavy concentration of
development in HCMC. Therefore, it is desirable to redefine the growth triangle on
a larger scale by strengthening the linkage between Can Tho-My Tho and Ba Ria-
Vung Tau where a future strategic gateway port will be located (see Figure 5.4).
Cross-border Corridors
There are 12 cross-border corridors, seven of which are primary and five are
secondary. For all these cross-border corridors, transport demand will not be so
large as to require a road of more than two lanes. Although there will be
opportunities for cross-border cooperation with neighboring countries, there would
be uncertainties about whether or not adequate policies and necessary
infrastructure and institutions will be mutually provided. Moreover, the construction
cost for many corridors will be considerable due to terrain conditions (see Figure
5.5). However, for primary routes, improved transport service and rehabilitated
transport infrastructure should be provided to promote cross-border movement in
line with Vietnam’s policy of integration into the region. For secondary routes,
upgrading of existing roads to all-weather condition is required, particularly from
the viewpoint of improving rural access.
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Figure 5.3
Long-term Transport Network Development Strategies for the North Growth Zone 1/
Figure 5.4
Long-term Transport Network Development Strategies for the South Growth Zone 1/
1/ Symbols (e.g. R12, H43, … etc) denote code no. of the identified/possible projects which comprise long-term strategies.
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Table 5.10
Summarized Strategies for Cross-border Corridors
Corridor
Classification Existing Modes
No. Name
8 Quang Ninh-China Secondary Road
9 Hanoi-Lang Son-China Primary Road, Rail
12 Hanoi-Lao Cai-China Primary Road, Rail, IWT
13 Hanoi-Dien Bien Phu-Northern Lao Secondary Road
14 Vinh-R8-Lao/Vientiane Primary Road
15 Vung Ang-R12-Lao/Thakhet Secondary Road
16 Dong Ha-R9-Loa/Savannakhet Primary Road
17 Danang-R14B-14-40-Lao/Pakse Primary Road
19 Qui Nhon-R19-Central Cambodia Secondary Road
23 HCMC-Cambodia/ Phnom Penh Primary Road, IWT
26 Can Tho-R91-Cambodia/Sihanoukville Port Secondary Road, IWT
27 Cuu Long-Cambodia Water Primary Road, IWT
Figure 5.5
Typical Cross-section of an East-West Corridor (Vinh-R8-Lao/Vientiane Route)
Altitude (m)
800
Lac-Vietnam Border
700 km 131
Nam Theun Bridge
Elevation
600 Bridge
Ban Lao L13/L8 Jn.
Road Jn.
500 Town
Mekong River km 25
Border
River
400 Point
NH/NH1 Junction
300
Cua Lo Port
200
km 265
Vinh
100
0
-50 -25 0 50 100(km) 150 200 250 300
Strategy for Institutional Development
Two main long-term institutional development issues concern (1) the role of the
private and public sectors in the transport sector, and (2) the distribution of state
responsibilities between government agencies (especially between national and
local government). How these issues are resolved in future years will affect the
distribution of responsibilities within the transport sector.
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The Role of the Public and Private Sectors: Under current economic policies
which involve encouragement of the private sector and equitization of state-owned
enterprises, the private sector will play an increasingly dominant role in the
provision of transport services. Experience from other countries shows that there is
no economic case for keeping most transport operations in state-ownership so
there is a strong case for implementing the government's equitization program
(mainly for road and inland water transport) and eventually extending its scope to
include large parts of the railway, maritime and aviation subsectors.
However there are many obstacles to equitization, including the unfavorable

business environment, limited interest by potential investors, limited financial
resources and serious issues concerning how to deal with surplus labor (which is
estimated by VINALINES to be as high as 50% of staff in the ports). Therefore a
step-by-step approach is anticipated to be followed in which initial experience with
equitizing small-scale enterprises is used to tackle the more challenging issues
involved in equitizing large scale enterprises. The private sector already plays a
dominant role in road and inland water transport operations. Under such a step-by-
step approach, the private sector will play a small but increasingly important role in
providing transport services in other subsector such as shipping and ports. The
private sector role in construction and maintenance of infrastructure and other
support services will also grow under current policies.
However it is clear that, even if the present equitization program could be

accelerated, the process will take many years. Reform of existing SOEs cannot
wait until then because of the need to foster competition and efficiency in the
transport sector. Therefore institutional reforms of the SOEs should be pursued in
parallel with equitization - giving the SOEs greater autonomy but subject to stricter
financial discipline, corporatizing large enterprises such as ports and airports, and
reorganizing the railway to make it more market-oriented.
Although the state can be expected to continue to play a dominant role in

infrastructure provision and management, there is a small but important role to be
played by the private sector in certain areas such as in the provision of toll
roads/bridges, port and airport terminal operations (often using privately-finance
equipment on infrastructure leased from the state). The scope for this is discussed
more fully in the next section on financing opportunities.
Distribution of Responsibilities between Government Agencies: In

accordance with the function of the infrastructure, it is appropriate for central and
local responsibilities to be assigned as follows:
• primary and secondary infrastructure is managed mainly by central
government, through the specialized departments of MOT such as VRA, VIWA
and VINAMARINE,
• tertiary infrastructure is managed mainly by provincial and district government.
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In practice such an approach could be implemented with considerable delegation

of responsibilities - keeping ultimate control over planning and standards at the
highest level while delegating direct management responsibilities to subsidiary
organizations (especially local government or even private maintenance units).
Depending on how the infrastructure is ultimately classified into primary, secondary

and tertiary, and how fast government decision-making is decentralized, this
approach to assigning responsibilities will involve various changes to current
responsibilities. The main likely changes are as follows:
• substantial powers and responsibilities presently concentrated in the MOT and
other ministries will be delegated to the specialized departments,
• the specialized departments will assume the project implementation functions
of the PMUs which will be abolished,
• many minor roads and waterways currently under MOT responsibility could be
classified as tertiary and placed under local government management, and
• direct management responsibility for most inland water ports (generally
classified as tertiary) will be transferred from enterprises under VIWA to
corporations under provincial government (although VIWA should continue to
have regulatory oversight).
Other changes in infrastructure responsibilities can be expected either to result

from the completion of the government's policy of separating oversight and
commercial responsibilities, or from increasing delegation of direct management
responsibilities, including:
• corporatization of public maritime ports as independent businesses outside the
umbrellas of VINALINES and VINAMARINE, preferably with one corporation
for each major port or group of smaller ports, in order to promote competition
between ports, but with VINAMARINE retaining planning and regulatory
oversight responsibility,
• corporatization of airports, possibly with one corporation for each of the three
major regions of the country, divested from CAAV but with CAAV retaining
planning and regulatory oversight responsibility.
For all ports and airports and for the railway further delegation can occur by the
corporations leasing facilities for use by private operators as described above.
Recommended Strategy for Institutional Development of Sector

Management: Effective sector management requires a greater degree of
decentralization, with government focussed on core oversight and infrastructure
management functions, employing better trained personnel. This calls for an
overall strategy with three elements:
• Enhancing Management Systems, requiring measures such as delegating
organizational responsibilities to the lowest possible unit, definition of modern
management systems and tools for planning, programming, financing and
database handling, implementing these systems with clear guidance
documents, monitoring and control mechanisms,
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• Divesting Commercial Functions, to complete the separation of commercial

and oversight functions and promote competition in supply of services such as
contracting of construction and consulting services,
• Human Resource Development, requiring measures such as clear policies,
stronger training incentives, enhanced training capacity and basis for finance.
Strategies for Infrastructure Funding – Constraints and Opportunities
Funding Scenario: Funding of transport infrastructure in Vietnam is severely

constrained due to a number of reasons such as low level of general revenue,
inadequate pricing, lack of user charge policy, inefficient use of available resources,
etc. Thus the government has no choice but to rely on ODA. An exercise has been
made to estimate the future funding scenario of the transport sector for different
assumptions about the level of dependency on ODA.
The results of the analysis clearly show that increasing dependence on ODA or,
conversely, drastic reduction in dependence on ODA are unrealistic options.
Therefore the most practical and likely policy direction for Vietnam’s transport
sector is to sustain current levels of ODA funding and, at the same time, to
strengthen domestic funding capacity through the creation of new fund sources,
improvement of financial management capacity, private sector participation, and
so on. Considering the widening gap between fund requirements and availability,
it is particularly crucial to expand substantially new charging mechanisms.
Table 5.11
Required Funding Amount by Source and Scenario1/
US$ billion
Scenario 1 Scenario 2 Scenario 3
Period Fund Source
Low2/ High2/ Low High Low High
2001-2010 Conventional 1.2 1.3 1.2 1.3 1.2 1.3
ODA 10.5 11.3 8.8 9.5 7.8 7.9
Additional Requirement - - 1.7 1.8 2.7 3.4
Subtotal 11.7 12.6 11.7 12.6 11.7 12.6
2011-2020 Conventional 2.1 2.5 2.1 2.5 2.1 2.5
ODA 18.4 22.5 11.4 13.9 5.1 5.8
Subtotal 20.5 25.0 20.5 25.0 20.5 25.0
Total Conventional 3.2 3.8 3.2 3.8 3.2 3.8
(2001-2020) ODA 28.9 33.8 20.2 23.4 12.9 13.8
Total 32.1 37.6 32.1 37.6 32.1 37.6
Source: VITRANSS
1/ “High” and “low” denote high and low future assumed GDP growth rates.
2/ The scenarios assumed in the analysis are as follows:
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Scenario 1 Scenario 2 Scenario 3

Heavy dependence on ODA Dependence on ODA The current dependence
will continue or increase in decreases gradually to about level on ODA will continue in
the future. 50% in the next two decades. the next decade and
gradually become nil.
Strengthening of Funding Capability: For a government to strengthen its funding

capability for transport development, there are basically three options:
• Increase budget by developing new fund sources through expansion of user

charges,
• Curtail costs by adopting more economical methods of development or by
improving efficiency and management in infrastructure development and
operation, and
• Shift fiscal responsibility more to the private sector, including foreign investment.
There are options for the Government of Vietnam to strengthen its funding
capability.
(1) Potential New Revenue Sources: In order to estimate the potential level of new
revenue sources, an exercise was made using selected charges on road
vehicles. The assumed charges include fuel tax (10% of the market price),
vehicle acquisition tax (10% of new-vehicle price) and vehicle ownership tax
(1% of new-vehicle price per year). The result showed that an approximate total
of US$ 37.5 billion could be raised in the next two decades.
Table 5.12
Possible Revenue Sources
Vehicle Vehicle
Fuel Tax
Acquisition Tax Ownership Tax
Period 10% of Market 10% of Vehicle 1% p.a. of New Total
Price Price Vehicle Price
2001 –2010 2.1 7.5 5.5 15.1
2011 – 2020 3.7 9.2 9.5 22.4
Total 5.8 16.7 15.0 37.5
Source: VITRANSS
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(2) Concept of Special Account: User charges and FILP (Fiscal Investment and
Loan Program) are the major candidate measures for expanding the
government budget. The former meets the “beneficiaries-pay” principle and
can be used more extensively considering the current charge level and future
economic growth. The latter meets the condition of fair shouldering of the cost
among generations (transport infrastructure has a long life), although it should
be clearly institutionalized before it is mobilized. Another option is the Special
Account for Transport Facilities Development, which mobilizes user charges,
FILP, development bonds, among others, to develop transport facilities. A
similar concept has been used in Korea where it is used not only for roads but
for other modes such as railways and ports.
Figure 5.6
Conceptual Framework of Special Account for Transport Facilities Development
Transport services Beneficiaries Amortization

(people, business)
Payment of tax, charges or fares
User charges Automobile FILP Development

charges bond
The National Special Account for

Transport Facilities Development
Subsidies Grants Loans Repayment
Transport Low profitability High profitability project

services
Development of Facilities
Road, Railway, Airport, Port, Waterway
(3) Private Sector Participation: Private sector participation in provision of

transport infrastructure is common in many countries (see Table 5.6). In
developing countries, however, it is not easy for the private sector to implement
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successfully the project, due to various risks such as government interference,

insufficient legal/institutional basis and socio-economic instability. The following
conditions need to be satisfied to mobilize private funds:
− The financial position of counterpart organizations, public corporations or

SOEs should be satisfactory.
− Contract commitments should be fully honored.
− Transparency in approval process or in selection of suppliers or contractors
should be maintained.
− Irrational intervention by the government in business operation and
management should be avoided.
− Related laws and regulations should be promulgated.
− Information should be disseminated.
− Government guarantee for the project should be considered if it is the
prerequisite of private investment.
Table 5.13
Public-Private Role-sharing for Transport Infrastructure Development and Operation
Player1/
Sector Item National Local Private
Gov’t. Gov’t. Sector
• Primary/Secondary üü - -
Infrastructure • Tertiary ü üü -
• Expressway ü ü üü
Road
• Passenger - ü üü
Public Transport • Freight - ü üü
• Terminals - ü üü
• Track/facilities üü ü -
Infrastructure
• Station - üü ü
Rail
• Passenger - - üü
Operation
• Freight - - üü
• Primary/Secondary üü ü üü
Infrastructure
• Tertiary ports ü üü ü
Port
• Primary/secondary ü - üü
Facilities/Operation
• Tertiary ports - ü üü
• Primary/Secondary üü ü -
Waterway
Inland • Tertiary ü üü -
Waterway • Infrastructure üü üü ü
River Port
• Operation - ü üü
• Primary/Secondary üü ü ü
Infrastructure
• Tertiary ü üü -
Airport
Terminals/operatio • Primary/Secondary ü ü ü
n • Tertiary ü ü -
1/ Symbol denotes as follows: üü: Primary role, ü: Secondary role
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6 MASTER PLAN
Objectives and Broad Priorities21
Objectives: The Master Plan is a ten-year plan that gives a more concrete
direction to the country’s transport system and services. It has the long-term
objective of making Vietnam’s transport sector competitive and equitable, where
consumer needs are satisfied at minimum cost. The Master Plan aims for a
transport sector that sustains balanced development of the country, protects and
enhances the environment and facilitates international integration at GMS and
ASEAN levels, as well as globally.
Although the VITRANSS’ main focus is on improvement and development of the

primary and secondary interprovincial transport network and operation, due
consideration is also given to integration and development of the tertiary network
and rural and urban transport, so that the entire transport network functions as a
system with no missing links or bottlenecks. The VITRANSS does not, of course,
make optimistic assumptions that the country will be provided with brand-new,
modern transport infrastructure and equipment within the Master Plan period.
However the VITRANSS does endeavor to enable the country to be effectively
integrated, with a better-maintained transport system and affordable transport
services.
Broad Priorities for the Master Plan: Vietnam’s transport sector is constrained in
terms of funding capacity. Available resources should thus be effectively allocated.
Accordingly, broad priorities have been defined for allocating the likely available
budget of the government. Broadly, these priorities are as follows.
1) Maintenance, rehabilitation and minor improvements outside the VITRANSS

project list. It is assumed that about 20% of the budget envelope will be
allocated for this.
2) Projects that remove traffic bottlenecks and strengthen the network to meet
demand.
3) Growth corridors in the north, south and central areas, which are expected to
act as engines of national economic growth. Strategic infrastructure for land,
water and air transport should be provided and integrated with transport links
to the global market and neighboring countries.
4) Strengthening of north-south integration and enabling the smooth flow of
people and goods.
5) Urban transport before congestion chokes the cities, especially in large urban
areas, and adversely affects the efficiency of interurban transport.
21
Whereas the Master Plan in the Study mainly aims to improve and develop interurban transport, it is to be
noted that the rural transport issue is also seriously being attended to and has a separate strategy being
developed by the government.
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Planning Considerations for Subsectors
Road and Road Transport: In the past decade, investment in Vietnam’s transport
sector was rather concentrated on primary roads and associated with institutional
reforms. As a result, road transport has become very competitive and its role in the
transport sector has been growing rapidly. The role of road transport will become
even more important as the economy grows and diversifies.
An analysis in the Study indicates that further investment in primary roads will
become economically less attractive, as investment in other subsectors, such as
ports, shipping and railway, become more viable in the future. This analysis also
indicates that a balanced development among the available modes is the most
economical solution for the future transport network. As a mode which can provide
door-to-door service and often functions as the first and end modes of line haulage
transport, the potential role of road transport is enormous, including for intermodal
transport, containerization and facilitation of cross-border transport.
Establishing a proper road maintenance system with adequate finance is vital for
the country’s economy because reducing expenditure on maintenance increases
vehicle operating costs by a much larger amount; attempts to save money by
investing less for road maintenance will cost the country much more in the end.
Resolving the main institutional constraints on road maintenance and finance in
the next few years is necessary to safeguard past and ongoing road transport
investments.
The key criteria to identify road projects in the Master Plan are specifically as
follows:
− Primary and secondary road networks22 will be completed by accelerating the

implementation of ongoing and committed projects as well as resolving
bottlenecks and developing strategic links with adequate standards and
pavement conditions.
− Bottlenecks which are expected to hinder smooth flow of interprovincial traffic
will be attended to in advance before the situation becomes critical, and
therefore more costly, especially in and around large urban areas.
− The second North-South link alternative to NH01 will be developed to comply
with the level of demand.
− International links between the adjoining countries of China, Laos and
Cambodia will be improved to all-weather standard. The 14 road links should be
prioritized according to demand and international agreements.
− In general, future investments in roads should undergo a more critical economic
evaluation. Prioritization is not only applied within the road subsector but also
applied to other transport subsectors as well. Of the identified seven major
22
It is proposed in the VITRANSS that national roads be reclassified based on function – whether primary or
secondary road.
6-2
Final Report
Summary
growth corridors, the critical ones are Hanoi-Nam Dinh/Ninh Binh, Hue-Danang-
Hoi An, HCMC-Da Lat-Nha Trang and HCMC-Can Tho.
− Whereas rural roads are given high priority, and projects/programs are
underway, network integration and improvement of provincial roads23 to link
them with the primary/secondary network and rural roads should be adequately
considered.
The road development plan involves removal of bottlenecks in key places in the
strategic network and strengthening of rural access. However, efficiency gains
from using modern (often larger) trucks, buses and other motor vehicles require a
considerable private sector investment, so creating an attractive business
environment in the transport sector is crucial to achieve the benefits from road
investment. To reduce the enormous burden and suffering caused by road
accidents, improvements must be made through a range of interventions.
Railway Subsector: The gap between the current institutional/operational

capacity of VR (constrained by institutional constraints and limited management
capacity), and its huge potential, is a central issue in the Master Plan. Reducing
this gap is a considerable challenge requiring years of reform to establish a
commercial framework, a more market-oriented organization and a firm contractual
basis for providing state assistance. Until 2005, planned investment is limited to
that required to sustain operations, giving time for the railway’s institutional
capability for handling the proposed investments to be increased. High priority
should be given to establishing realistic business plans and a reformed
organization to handle potentially much more traffic after 2005.
On condition that institutional constraints are removed and management capacity

is adequately increased, the areas of further investment will include the following:
− Improvement and expansion of the lines in the growth corridors such as Hanoi-
Hai Phong (101 km) and Saigon-Bien Hoa (29 km).
− Following rehabilitation, the north-south link will be strengthened, including the
construction of additional stations and a new Hai Van Pass tunnel.
− For links in urban areas, especially in Hanoi and HCMC, conflicts with urban
traffic should be reduced by elevating critical sections before the situation
becomes unmanageable.
− Replacement of rolling stock should be properly undertaken on a strictly
commercial basis, that is, if it will contribute to the profitability of the railway.
Inland Waterway Subsector: The prospects for growth of inland water transport
are fairly modest, but significant gains in terms of efficiency can be achieved from
dredging of rivers to allow larger, more efficient vessels to operate. Achieving
these benefits requires an attractive business environment so that private
23
Provincial roads, as well as rural roads, mostly fall under the tertiary category and not adequately covered
by the VITRANSS.
6-3
Final Report
Summary
investment will be attracted. Ports must be commercialized so that they no longer

remain transport bottlenecks which deter use of more efficient vessels.
Regarding infrastructure management, improved maintenance is absolutely crucial

so that waterways will not soon become silted up again. This requires efficient
dredging maintenance, better maintenance management and a mechanism to
ensure a stable fund source for maintenance. The provision of navigational aids
that will allow night-time navigation is also essential to raise the vessels’
productivity.
Key areas of investment for the Master Plan period are as follows:
− Improvement and strengthening of inland waterways and related ports along
selected growth corridors such as Quang Ninh-Hai Phong-Hanoi waterway,
Quang Ninh-Pha Lai waterway, Day River (Cua Day-Ninh Binh), Red River
(Lach Giang-Nam Dinh-Hanoi), DNC (Day-Ninh Co) canal, Hanoi/Khuyen
Luong port, and Ninh Binh/Ninh Phuc port in the north and HCMC-Can Tho
waterway, Saigon-Dong Thap Muoi-Long Xuyen waterway, Thi Vai-Nuoc Man
canal, and My Tho/Can Tho IWT ports in the south.
− Improvement of two international waterways, such as Han River via Can Tho
and Thien River via My Tho to Cambodia, to accommodate larger vessels and
provide them with a better transport environment.
− Expansion and improvement of rural IWT including waterways and river ports
managed by local governments.
− Improvement of river transport safety including night-time navigation of heavily
trafficked routes (Class A and B routes) and improved daytime navigational
services on the rest of the routes
− Upgrading of existing two IWT schools to meet the increasing demand for
training of river crew as IWT services expand and modernize.
− Strengthening of safety standards for IWT vessels and removal of financing
bottlenecks constraining fleet development.
Maritime Subsector: Vietnam’s port sector services have not adequately kept up
with growing demand, hence port congestion has worsened.24 Investment in Hai
Phong and Saigon has increased handling capacity, but critical issues common to
Vietnamese ports, such as narrow and shallow water area and inefficient cargo
handling, have yet to be solved. Attempts at expansion of the Vietnamese
international shipping fleet have also not resulted in increased market shares due
to poor competitiveness. On the other hand, coastal shipping has grown yearly
and new services, including liner container operation, have commenced. In order
for Vietnam to sustain its future economic growth, the development of competitive
gateway ports is critical to support efficient and economic international shipping
services.
24
Between 1991 and 1998, traffic at MOT ports increased from 796,000 tons to 1.7 million tons (2.1 times),
and the total length of berths increased from 6,647 m to 8,267 m.
6-4
Final Report
Summary
The role of coastal shipping is anticipated to grow substantially not only for
conventional bulk goods, but also for general cargo. Short-term port investments
are proposed at general-purpose ports, taking into account the scope for port
productivity improvement and investment in modern navigational aids. Port
planning must be strengthened to minimize overall development costs and avoid
adverse environmental impacts. Responsibilities between maritime and inland
water transport must be clarified. However, the role of coastal shipping will depend
heavily on the extent to which shipping management can be improved and smooth
links between coastal shipping and other modes can be established (especially
better port services to encourage investment in modern vessels with efficient
handling equipment).
To tap private sector investment and foreign know-how, the business environment
must be considerably improved in the next five years by reducing the dominant
presence of VINALINES and its dual influence over both shipping and ports, and
reducing barriers to foreign investment. In addition, new financial mechanisms for
modernizing the coastal shipping fleet are required and it is necessary for coastal
shipping to pay its fair share of the cost of infrastructure (instead of being
subsidized as at present).
Investment areas to be focused on are as follows:

− Development of an efficient nationwide port network by channeling investments
to nine ports (port complex) – Hai Phong Port, Quang Ninh Deep-sea Port (so
far, Cai Lan Port), Cua Lo Port, Danang Bay Port System, Qui Nhon Port, Nha
Trang Port, Saigon River Ports Group, Vung Tau-Thi Vai Deep-sea Port, and
Can Tho Port.
− Construction or expansion of nine specialized ports to serve specialized
shipping such as Dung Quat Port for the exclusive use of oil tankers.
− Development of international gateway ports in the north, central and south:
(a) Quang Ninh Deep-sea Port, including expansion of Cai Lan Port with Ha
Long Bay environmental protection measures, followed by a coastal space
management study to determine the appropriate gateway port site, before
development of additional berths.
(b) Danang Bay Port System, including expansion of Tien Sa Port by 2005
followed by the development of Lien Chieu Port.
(c) Vung Tau-Thi Vai Deep-sea Port, requiring a more detailed master plan
study followed by the development of a deep-sea port at an appropriate
location(s).
− Improvement of selected local ports to improve local access and meet demand.
− Installation of navigational aids and deployment of SAR ships to enhance
maritime safety on Vietnamese waters.
− Upgrading of seafarers’ education to meet international maritime conventions
such as STCW-95, SOLAS and ISM Code.
− Provision of adequate financing mechanisms to facilitate fleet development.
6-5
Final Report
Summary
Ports are expected to take a leading role in developing the hinterland. Developers
who promote new industrial estates, particularly those facing the sea or rivers,
badly need good access ports. Of relevance are those of Vung Ang, Chan May, Ky
Ha, Dung Quat, and Cai Cui among others. However, port development should be
coordinated with hinterland development to avoid capacity underutilization.
In Vietnam, there are 67 industrial estates: 14 in the north, 13 in the central area
and 40 in the south. Only 10 estates have successfully leased more than half of
their land, all located in the south. Even Nomura Haiphong, nearby Hai Phong Port,
the best furnished industrial estate in the north, suffers from low occupancy.
Therefore, it would be prudent to examine the viability, timing and location of new
ports adjacent to industrial estates.
The VITRANSS guidelines to develop new ports in relation to industrial

development are as follows:
(a) Dung Quat Port will be developed to serve crude oil and refined oil products
initially, and then to expand its general cargo capacity in line with Dung Quat
Industrial Zone development.
(b) Cai Sao Port will be constructed only after Can Tho Port has no further
expansion capacity.
(c) The VITRANSS traffic demand forecast indicates insufficient future traffic at
Vung Ang, Chan May, Ky Ha and other ports serving industrial estates, to
justify their implementation even taking transit cargo into account.
Aviation Subsector: This sector is expected to continue to grow rapidly and there
is a need for substantial upgrading and development of infrastructure. Better
planning and evaluation capacity is required to target investment where it will be
justifiable, and infrastructure charges must be revised to finance them on a
commercial basis. To meet the required high standards of safety and passenger
service, especially under the increasingly liberalized, competitive environment in
the region, management of airlines and airports must be strengthened. This
requires commercialization of airports, removal of fares controls and introduction of
more competition in the airline industry.
The areas to be covered in the Master Plan are as follows:
− Establishment of a hierarchical and functional airport network in accordance

with ICAO standards including three primary airports (3,600-meter runway, 24-
hour operation), three secondary airports (2,000-meter runway, 24-hour
operation) and 13 tertiary airports (1,200-2000-meter runway, daytime
operation).
− Upgrading and expansion of the three primary airports of Noi Bai, Danang and
Tan Son Nhat.
− Expansion of three secondary airports – Cat Bi (Hai Phong), Phu Bai (Hue) and
Nha Trang – in the designated growth corridors and near famous tourism
destinations.
6-6
Final Report
Summary
− Construction of four tertiary airports in Cao Bang, Lao Cai, Dong Hoi, and Chu
Lai. Except for Cao Bang the others used to have airports for civil or military use
which are still available. The existing nine tertiary airports will be improved to
enhance air safety and meet increasing demand.
− Implementation of the CNS/ATM program submitted by Vietnam to ICAO.
− Provision of new training equipment for the Civil Aviation Training Center of
Vietnam.
Multimodal Transport and Other Aspects: The development of an efficient

multimodal transport in Vietnam is essential to promote foreign trade, requiring
both investments in container handling facilities and introduction of new systems.
Infrastructure and institutional bottlenecks must be reduced to promote cross-
border transport of all types. Supporting policy recommendations include
introducing/simplifying the regulatory framework, encouraging foreign participation
in investment and targeting government investment in the most effective way.
Initial Screening and Identification of Master Plan Candidate Projects
The initial long list of projects, derived from the proposed long-term strategies,
were screened to identify candidate projects for the Master Plan.25 The projects in
the initial list were placed into one of three groups:
Group 1: Ongoing/committed projects. Taken as given in the Master Plan (see

Appendix 6.1).
Group 2: Projects proposed in the VITRANSS as candidate projects. These
projects will be evaluated and selected for the Master Plan (see
Appendix 6.2).
Group 3: Projects proposed in the VITRANSS as long-term projects, therefore
excluded from the Master Plan.
Group 2 projects are composed of (1) transport equipment, such as rolling stock,
vessels and aircraft, which are basically acquired by operators in accordance with
financial viability (4 projects), (2) projects related to safety and training (4 projects),
and (3) infrastructure projects (95 infrastructure projects and 15 equipment/
facilities/system projects), (see Appendix 6.2). These projects are also categorized
by subsector, as follows:
Road: (1) Primary road network development (8 projects)

(2) Secondary road network development (20 projects)
(3) Road safety promotion (1 project)
(4) Expressways (9 projects)
Railway: (1) Rehabilitation and minor improvement (4 projects)

(2) Capacity expansion of critical sections (14 project)
(3) Construction of new lines (4 projects)
25
The long list is excluded from the Summary Report but included in the Main Text.
6-7
Final Report
Summary
(4) Operation and rolling stock improvement (2 projects)
IWT: (1) Port improvement (9 projects)

(2) Waterway improvement (12 projects)
(3) Fleet and safety improvement (2 projects)
Port & (1) Port expansion/development (10 projects)

Shipping: (2) Operation and safety improvement (6 projects)
Air: (1) Airport expansion/development (6 projects)

(2) Construction of air traffic terminal (10 projects)
(3) Aircraft procurement (1 project)
The total cost of these candidate projects is roughly US$ 26 billion.
Evaluation of Master Plan Candidate Projects
Methodology: The candidate projects (a total of 118) have been evaluated

primarily from the economic viewpoint because the nature of the VITRANSS
projects is to serve the interprovincial level of transport needs. Some candidate
projects, which are difficult to be assessed quantitatively, are prioritized based on
the judgement of the Study Team. A total number of 110 projects underwent
evaluation, 95 of which were evaluated quantitatively from the economic viewpoint
as well as comprehensively.
Economic Evaluation: The economic evaluation was done using the network
analysis applied in the Study, based on a number of assumptions.26
Other Evaluation Criteria: Other criteria employed in the project evaluation

included: (1) Network integration: Contribution to strengthen the network; (2)
International linkage: Contribution to strengthen international linkage; (3) Cost
recovery: Opportunity to recover the cost of investment in the project; (4) Social
equity/poverty alleviation: Contribution to social equity and poverty alleviation; (5)
Environment: Level of impact of the project on the environment; and (6)
Resettlement and ROW acquisition: Magnitude of requirements for resettlement
and right-of-way acquisition
For (1), (2), (3), and (4), the results of qualitative assessment were translated into
EI equivalent points according to the extent of the project's impact: 3 points for
26
The assumptions are: (1) All projects are implemented in three years (2002-2004) and put to public use in
2005; (2) Project benefit comprises the savings in operating cost and passenger time cost; and (3) Output
indicator of the analysis is EIRR (economic internal rate of return). In this economic evaluation, however,
the benefit of each project was calculated by allocating the entire economic benefits of the subsector to
each project in proportion to the estimated transport cost reduction by the project. Therefore, it is called EI
(economic indicator) in this exercise.
6-8
Final Report
Summary
significantly positive impact, 1 point for moderately positive impact, and zero for
minimal positive impact.27
Evaluation of Equipment/Facility/System: There are 15 projects difficult to

evaluate using the above process. They were evaluated as follows: projects
proposed in relation to infrastructure projects are given the same points as the
infrastructure projects, and projects required to be implemented under international
agreements are given higher points.
Evaluation Indicator: Thus the result of the project evaluation is a total of EI (%)
value and additional points are given based on the evaluation of non-economic
factors. The evaluation indicator provides the basis for categorizing the projects by
priority (see Appendix 6.3). “A” and “B” projects are considered for inclusion in the
Master Plan.
Group A: projects with more than 20 points and higher priority than B
Group B: projects with more than 20 points
Group C: projects with less than 20 points
Master Plan Program
Selection of Master Plan Projects: A total of 116 projects considered necessary

to provide the transport network and services intended under the Master Plan
period have been selected (see Table 6.1 and Figure 6.1 for the location of
infrastructure projects).
− Ongoing and committed projects (33 projects)

− Safety and training projects (4 projects)
− Infrastructure projects (64 projects)
− Equipment/facility/system projects integrated with the above infrastructure
projects (15 projects)
Investment Requirement: The investment requirement of the Master Plan

reaches almost US$ 11.5 billion in total capital costs. Excluding that part of the
investment required for revenue-generating projects, such as expressways and
ports, and the cost of transport equipment that operators should shoulder, the cost
to government (central and local) is estimated to be about US$ 10.5 billion (see
Table 6.2). Road accounts for about 65% of the cost to government, followed by
rail (13.2%), port and shipping (11.5%), air (6.6%), and inland waterway (3.6%),
However, the road subsector includes US$ 3.6 billion for ongoing/committed
projects which is almost 50% of the total road investment cost.
Another important area of investment in the transport sector is transport equipment

for road, railway, IWT, shipping, and air subsectors. The total investment is roughly
US$ 38 billion, 84% of which is for road vehicles (see Table 6.3).
27
“Environment” and “Resettlement/ROW Acquisition” are used as reference and not converted to priority
points.
6-9
Final Report
Summary
Table 6.1
List of Master Plan Projects (up to 2010)
Project Cost
Project Status Fund (million US$)
Sector Project Priority1/
No. (original Schedule) Source
Total 2001-
Road Primary Road Network Development
H01 Highway Rehabilitation Project (Hanoi-Lang Son; Ongoing ADB 162.5 16.3 A
190km) (1997-2000)
H02 Highway Rehabilitation Project II (Vinh-Dong Ha; Ongoing WB 236.6 23.7 A
100km) (1997-2000)
H03 2nd Road Development (Nha Trang-Quang Ngai; Ongoing ADB 163.0 81.5 A
600km) (1999-2002)
H04 Highway Rehabilitation Project III (Can Tho-Nam Can; Ongoing WB 180.0 180.0 A
230km) (2000-2004)
H05 Bridge Rehabilitation Project - Phase I (435km) Ongoing JBIC 162.2 16.2 A
(1995-2000)
H06 Bridge Rehabilitation Project - Phase II (752km) Ongoing JBIC 211.0 105.5 A
(1996-2001)
H07 Hai Van Pass Tunnel (2 lanes, 14km) Ongoing JBIC 251.0 225.9 A
(1998-2003)
H08 My Thuan Bridge (1,535m) Ongoing Australia 79.3 15.9 A
(1997-2000)
H09 Can Tho Bridge Construction Ongoing JBIC 294.0 294.0 A
(2000-2004)
H10 National Highway No.1 Urban Bypass (Hanoi-HCMC; New 67.0 67.0 A
70km)
H12 Rehabilitation and Upgrading of HCM Highway Ongoing GOV 380.0 380.0 A
(2000-2003)
H13 National Highway No.14 Rehabilitation Project Ongoing GOV 15.0 15.0 A
(2000-2003)
H14 Hanoi Ring Road New 256.0 256.0 A
H15 Thanh Tri Bridge Construction Ongoing JBIC 410.0 410.0 A
(2000-2004)
H16 National Highway No.5 Improvement Project (remaining Ongoing JBIC 215.6 215.6 A
section, 91km) (1995-2000)
H17 National Highway No.18 Widening Projects - Phase 2 Ongoing JBIC 232.0 232.0 A
(remain section, 70km) (1998-2003)
H18 Bai Chay Bridge Construction Ongoing JBIC 98.0 98.0 A
(2000-2004)
H19 National Highway No.1 Hanoi - Ninh Binh Widening New 76.0 76.0 A
Project (80km)
H20 National Highway No.70 Upgrading Project (Hanoi-Lao New 125.0 125.0 A
Cai; 191km)
H21 National Highway No.10 Upgrading Project (147km) Ongoing JBIC 302.0 302.0 A
(1998-2003)
H22 National Highway No.21 Upgrading Project (80km) New 58.0 58.0 B
H23 East-West Corridor Project (ASEAN 7; NH8, 8B; 110km) New 90.0 90.0 B
H24 East-West Corridor Project (ASEAN 8; NH9; 75km) Ongoing ADB 30.0 24.0 A
(1999-2003)
H25 East-West Corridor Project (ASEAN 7A; NH12A, 29; Ongoing GOV 65.0 39.0 A
120km)
H26 National Highway No.40 Upgrading Project (ASEAN New 14.0 14.0 B
7B,24km)
H27 Rehabilitation (NH19, 20, 24, 26, 27, 28) New 150.0 150.0 B
H29 Trans HCMC Highway Project (21.4km) Ongoing JBIC 758.6 758.6 A
(2000-2004)
H30 Trans Asia Highway Project (NH22 to Cambodia; 80km) Ongoing ADB 144.7 144.7 A
(1999-2002)
Secondary Road Network Development
H31 Hanoi-Cao Bang (NH3) Improvement (310km) New 148.0 148.0 B
H32 Hanoi-Ha Giang (NH2) Improvement (300km) New 137.0 137.0 B
H33 Hanoi-Dien Bien Phu (NH6) Improvement (468km) New 223.0 223.0 B
H34 Hanoi-Lai Chau (NH32) Improvement (390km) New 200.0 200.0 B
H35 North C1 (North-East Ring, NH5-NH3, NH37; 150km) New 101.0 101.0 B
H36 North C1 (North Ring, NH3-NH70, NH37; 115km) New 122.0 122.0 B
H41 Cua Ong-Bac Luan (NH18) Road Improvement (130km) New 92.0 92.0 B
H42 Hung Yen-Thai Binh Road (NH39) Improvement New 124.0 124.0 B
(100km)
H43 HCMC-My Tho Road (NH50) Improvement (80km) New 79.0 79.0 B
H45 Can Tho-Ha Tien (NH80) Improvement (200km) New 197.0 197.0 B
H46 Can Tho-Kien Giang-Ca Mau Route Improvement New 197.0 197.0 B
(200km)
1/ “A” refers to projects for implementation before 2005, while “B”, after 2005.
6-10
Final Report
Summary
Cont. Table 6.1

Project Cost
Project Status Fund
Sector Project (million US$) Priority1/
No. (Original Schedule) Source
Total 2001-
H48 NH22B Improvement (Go Dau-Xau Mai; 80km) New 55.0 55.0 B
H49 Secondary Road Network rehabilitation Program New 94.0 94.0 A
H50 Tertiary Road Improvement Project New 569.0 569.0 A
Road Safety
H52 Road Safety Improvement Program New 30.0 30.0 A
Expressway
H60 HCMC-Can Tho Expressway 1 (HCMC-My Tho; 50km) New 350.0 350.0 B
Subtotal 7,944.5 7,131.9
Railway Rehabilitation and Minor Improvement
R01 Hanoi-HCMC Railway Bridge Rehabilitation Ongoing JBIC 104.0 47.0 A
(1995-2001)
R02 Rehabilitation of Tracks & Bridges New 325.0 325.0 A
R04 Hai Van Pass Tunnel New 389.0 389.0 B
R05 Signal and Communication Equipment Modernization New 128.0 128.0 A
R07 Alarm at Crossings New 21.0 21.0 A
Capacity Expansion of Critical Sections
R08 New Stations for Train Exchange (100 stations) New 26.0 26.0 A
R11 Bien Hoa - Saigon section (29.4km) New 130.0 130.0 B
R12 Hanoi - Haiphong section (101.4km) New 293.0 293.0 B
R13 Hanoi - Giap Bat section (5.4km) New 32.0 32.0 B
Operation
R28 CTC and Computerization New 136.0 136.0 A
Subtotal 1,584.0 1,527.0
Inland Port Improvement
Water- W01 Hanoi/Khuyen Luong Port Improvement New 11.0 11.0 A
way
W03 Ninh Binh/Ninh Phuc Port Improvement Partly Ongoing GOV 14.4 14.4 A
W05 Viet Tri Port Improvement New 3.5 3.5 B
W08 My Tho/Can Tho Port Improvement for IWT Partly Ongoing WB/GOV 6.1 6.1 A
W10 Vinh Thai (Vinh Long) Port Improvement New 4.3 4.3 A
W12 Ca Mau Port Improvement New 2.9 2.9 A
W14 Cao Lanh (Dong Thap) Port Improvement New 6.4 6.4 A
W16 My Thoi (Long Xuyen) Port Improvement New 6.2 6.2 A
W18 Passenger Terminal Development New 2.2 2.2 A
W20 Other Local Port Development New 47.7 47.7 A
Waterway Improvement
W22 Quang Ninh-Hanoi/Pha Lai Waterway Improvement New 13.9 13.9 A
W23 Ninh Binh/Nam Dinh-Hanoi Waterway Improvement New 19.9 19.9 A
W24 Quang Ninh-Nam Dinh/Ninh Binh Waterway New 6.0 6.0 A
Improvement
W25 Hanoi-Viet Tri-Lao Cai Waterway Improvement New 74.0 74.0 A
W29 HCM-Can Tho Waterway Improvement Partly Ongoing WB/GOV 23.2 23.2 A
W30 Can Tho-Ca Mau Waterway Improvement Partly Ongoing WB/GOV 17.6 17.6 A
W31 Cho-Lach-Kien Luong Waterway Improvement Partly Ongoing WB/GOV 25.5 25.5 A
W32 Saigon-Dong Thap Muoi-Long Xuyen Waterway Partly Ongoing GOV 5.4 5.4 A
Improvement
W33 Thi Vai-Nuoc Man Canal Development New 3.2 3.2 A
W35 Da River and Hoa Binh Port Improvement in Hoa Binh New 2.1 2.1 B
Lake
W36 Cuu Long-Cambodia Waterway Improvement New 20.5 20.5 B
W37 Island Service Improvement (Co To and Cat Ba Islands) New 2.5 2.5 B
Operation & Safety
W39 IWT Safety Enhancement New 52.7 52.7 A
W41 IWT Education Ongoing CIDA 14.1 14.1 A
(1997-2002)
Subtotal 385.3 385.3
Port & Port Expansion/Development
Ship- P01 Cai Lan Port Expansion Project Partly Ongoing JBIC 128.1 128.1 A
ping (96-01)
P03 Hai Phong General Port (Phase II) Ongoing JBIC 138.0 138.0 A
(2000-2010)
P05 Cua Lo Port Project New 49.3 49.3 A
P07 Danang Bay - Lien Chieu Port Development New 158.0 158.0 B
P09 Danang Bay - Tien Sa Port Rehabilitation Partly Ongoing JBIC 172.0 172.0 A
(1999-2003)
6-11
Final Report
Summary
Cont. Table 6.1

Project Cost
Project Status Fund
Sector Project (million US$) Priority1/
No. (original Schedule) Source
Total 2001-
P10 Specialized Port for Dung Quat Industrial Zone New 130.0 130.0 A
P12 Qui Nhon Port Development New 36.0 36.0 A
P14 Nha Trang Port Development New 57.0 57.0 A
P16 Ho Chi Minh City General Port New 200.0 200.0 A
P18 Ba Ria Vung Tau General Port New 206.0 206.0 A
P20 Can Tho Port Development New 64.0 64.0 A
P22 Industrial Port Development New 67.0 67.0 A
P24 Other Local Ports New 22.7 22.7 A
Operation & Safety
P26 Port EDI System at Gateway Ports New 10.0 10.0 B
P27 Large-scale ICD Development Project New 72.2 72.2 B
P31 Development of Aids to Navigation (ATN) New 63.6 63.6 A
P33 Maritime SAR and Oil Spill Protection New 52.8 52.8 A
P35 Seafarers' Education Upgrading Project New 20.9 20.9 A
Subtotal 1,647.6 1,647.6
Air Airport Expansion/Development
A01 Noi Bai International Airport Development Project Ongoing GOV 57.1 17.1 A
(1996-2002)
A02 New Passenger Terminal Building (T1) Construction in Ongoing GOV & 80.0 24.0 A
Noi Bai International Airport (1995-2001) Credit
Loans
A03 Noi Bai Airport Development Project - Phase 1 New 53.9 53.9 A
A05 Danang International Airport Development Project - New 77.7 77.7 A
Phase 1
A07 Expansion of International Passenger Terminal Building Ongoing SAA 12.0 6.0 A
in Tan Son Nhat International Airport (1999-2002)
A08 Airfield Pavement Overlay in Tan Son Nhat International Ongoing SAA 16.0 14.4 A
Airport (1999-2001)
A09 Tan Son Nhat International Airport Development Project New 226.7 226.7 A
A11 Secondary Airport Development Project (Cat Bi, Phu New 85.6 85.6 A
Bai, Nha Trang)
A13 New Airport Construction Project (Cao Bang, Lao Cai, New 83.6 83.6 B
Dong Hoi, Chu Lai)
A14 Rehabilitation of Tertiary Airports - Phase 1 (9 airports) New 120.8 120.8 A
Air Traffic Control
A16 Reconstruction of HCM Area Control Center and Noi Bai New 58.0 58.0 A
Air Traffic Management Center
A17 Provision of Navigation Aids in Secondary Airport (Cat New 4.5 4.5 B
Bi, Phu Bai, Nha Trang)
A18 Provision of Control Tower System Packages and New 1.3 1.3 B
Automatic Weather Observation Stations (AWOS) in 4
New Airports
A19 Communication and Navigational Equipment New 12.2 12.2 A
Replacement Program
A20 Equipment Installation and Upgrading Project for New New 32.8 32.8 A
CNS/ATM -Phase 1
A21 Equipment Installation and Upgrading Project for New New 10.9 10.9 B
CNS/ATM - Phase 2
A22 Restructuring of Air Traffic Service - Direct Speech New 2.5 2.5 A
(ATS-DS) Circuits and Aeronautical Fixed
Telecommunications Network (AFTN)
A23 Rehabilitation of Civil Aviation Training Center of New 3.0 3.0 A
Vietnam (CATCV)
A24 Flight Calibration of Navigation Aids New 1.1 1.1 A
A25 Test Equipment Replacement and the Equipment New 1.9 1.9 A
Standards Laboratory
Total 12,503.0 11,529.8

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Figure 6.1-a
Master Plan Projects up to 2010 (Infrastructure Projects Only), North
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Figure 6.1-b
Master Plan Projects up to 2010 (Infrastructure Projects Only), Central Vietnam
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Figure 6.1-c
Master Plan Projects up to 2010 (Infrastructure Projects Only), South
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Table 6.2
Investment Requirement for the Transport Sector up to 2010
Estimated Capital
Cost to Government
Cost (US$ mil)
Sector Category
Share % in
Total Ongoing US$ Mil. % to Total
Capital Cost
• Primary Road Network Development 4,413.9 3,577.9 100 4,414 41.9
• Secondary Road Network Development 2,338.0 - 100 2,338 22.2
Road • Road Safety 30.0 - 100 30 0.3
• Expressway 350.0 - 20 70 0.7
Subtotal 7,131.9 3,577.9 - 6,852 65.1
• Rehabilitation and Minor Improvement 910.0 47.0 100 910 8.6
• Capacity Expansion of Critical Sections 481.0 - 100 481 4.6
Railway
• Operation 136.0 - 0 0 0.0
Subtotal 1,527.0 47.0 - 1,391 13.2
• Port Improvement 104.7 20.5 90 94 0.9
Inland • Waterway Improvement 213.8 71.7 100 214 2.0
Waterway • Safety 66.8 14.1 100 67 0.6
Subtotal 385.3 106.3 - 375 3.6
• Port Expansion/Development 1,428.1 438.1 70 990 9.4
Port &
• Safety 219.5 - 100 220 2.1
Shipping
Subtotal 1,647.6 438.1 - 1,209 11.5
• Airport Expansion/Development 709.8 61.5 80 568 5.4
Air • Air Traffic Control 128.2 - 100 128 1.2
Subtotal 838.0 61.5 - 696 6.6
Total 11,529.8 4,230.8 - 10,523 100.0
Source: VITRANSS
Table 6.3
Transport Equipment Costs for the Master Plan Period
Cost
Sector Type
US$ mil %
Road Car, utility vehicle, truck, bus, 32,200 84.8
motorcycle
Railway Diesel/electric locomotive, 1,882 5.0
passenger cars, wagons
Inland Waterway Cargo and passenger ships 192 0.5
Shipping Ocean-going vessels, coastal 1,407 3.7
ships
Air Various aircraft 2,289 6.0
Total 37,970 100.0
1/ Including ongoing projects worth US$ 500 million, of which US$ 400 million is included in
the Master Plan period.
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Overall Evaluation by Subsector: An economic evaluation was conducted on the

projects included in the Master Plan by subsector on several assumptions.28 The
results indicate that: If all the Master Plan projects are implemented, the overall
EIRR is calculated at 22%; The road subsector registers an average of 25% EIRR.
However, if ongoing and committed projects are excluded, the average EIRR
reduces to 12%. This implies that the future investments in roads should undergo
critical economic evaluation. The railway subsector shows a sound level of EIRR
on condition that the system can be operated and managed efficiently. Port and
coastal shipping, including inland waterway transport, show a significant economic
return, clearly indicating that this subsector will become critical in meeting the
future demand (see Table 6.4).
Table 6.4
Economic Evaluation of Master Plan Projects by Subsector
Benefit (US$ mil) NPV1/

Subsector Cost EIRR (%)
2010 2020 (US$ mil)
Road All Projects 7,113 2,278 5,357 24.7 7,191
Excluding 3,028 437 640 12.1 22
committed and
ongoing projects
Railway 979 276 687 22.1 808
Port/Coastal Shipping 1,411 1,107 4,337 43.3 5,789
2/
3 Subsectors 9,503 2,563 7,266 21.8 7,227
1/ Discounted by 12 p.a.
2/ Including committed and ongoing projects
Investment Requirement vs. Fund Availability
The possible investment amount for the Master Plan period (2001-2010) was
estimated at US$ 11.7-12.6 billion29, assuming a 2.5% allocation of GDP to the
transport sector.
The total investment requirements of the transport sector include

maintenance/minor projects and urban and rural transport which amount to
US$ 5.9 billion and are outside of the VITRANSS but are definitely needed and
given high priority by the government.30 Thus, available funds for the VITRANSS is
US$ 5.8 to 6.7 billion, of which US$ 3.0 billion is for ongoing/committed projects
and only US$ 2.8 to 3.7 billion is available for new projects (see Table 6.5).
On the other hand, the selected new projects for the Master Plan require a total of
US$ 6.1 billion, and US$ 3.9 billion is needed for the disbursement during the
28
Key assumptions include 2005 as the starting year, project life of 30 years, and SCF of 80%.
29
The range of the amount is due to the difference in the assumed GDP growth rate.
30
Urban and rural transport sectors have not been covered by the VITRANSS. Since strategies on rural
transport sector are being developed by the World Bank with the support of the DFID of UK, they need to
be further incorporated in the Master Plan.
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Master Plan period. This indicates that the proposed investment size needs to be
reduced, otherwise implementation will be a little delayed.
Table 6.5
Investment Requirements vs. Fund Availability
US$ billion
• Investment Requirement for the Master Plan Period
(2001-2010)
1) Maintenance/Minor Projects not covered by the 2.4
VITRANSS
2) Urban Transport1/ 2.5
2/
3) Rural Transport 1.0
Subtotal 5.9
4) VITRANSS Project
(1) Ongoing/Committed Projects 3.0
(2) New Projects 6.1 (3.9)3/
Subtotal 9.1 (6.9)3/
Total 15.0 (12.8)3/
• Possible Available Fund (Low – High Case) 11.7 – 12.6
1/ At present, there are no definite strategy and investment program for urban transport.
2/ The amount needs to be adjusted based on the strategy which is being developed by the
government.
3/ The amount to be disbursed during the Master Plan period.
Selection of Core Projects
For this reason, a total of 50 core projects (projects under priority A in Table 6.1)
which cost US$ 4.1 billion have been selected. In order to expand implementation
beyond these core projects, it is necessary either to improve cost recovery of the
projects or increase the overall financial allocation to the transport sector.
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7 SHORT-TERM PLAN
Objective
This chapter sets out the short-term investment priorities for public investment,
based on the evaluation of projects included in the master plan. Suggested
investment priorities are given for each mode, together with the main supporting
policy measures and institutional changes that are required to achieve the master
plan objectives. Further details of the required policy and institutional changes are
given in Chapter 8, together with proposed technical assistance projects that
would help to implement the short-term plan successfully.
Subsector Priorities in the Short-term
Road: For road transport to play its expected role in carrying increased traffic at
minimum cost, increasing accessibility and level of service with minimum adverse
impacts such as accidents, the main short-term investment priorities are (a)
completing the current rehabilitation program of the primary/secondary road
network, to provide the basic network of strategic links for efficient operation of
modern motor vehicles, and (b) implementing the tertiary road improvement
project to provide rural access. This calls for completion of the many
primary/secondary road projects already underway or committed and, where
finance permits, the start of new projects which tackle expected short-term
bottlenecks (mainly cross-river sections and roads around metropolitan areas such
as Hanoi and HCMC) or which develop the strategic north-south and east west
corridors (both of which are important from the government's policy viewpoint).
See Figure 7.1 for details of these projects.
In support of these investments, to increase efficiency, safety and level of service,

whilst minimizing infrastructure costs, important short-term policy measures are
required to be taken in three key areas:
(a) increasing efficiency of road transport services, through providing a legal basis
for the competitive environment for road transport services and an accelerated
equitization program for bus and truck enterprises,
(b) improving safety, through strengthening the road safety program and the way
that regulations are enforced (supported by investments included in the short-
term plan),
(c) establishing a sustainable road management (especially maintenance) and
financing system, through institutional strengthening of subsector agencies,
better road contracting systems, and better methods of road funding based on
user charges.
Railway: If operating efficiency and level of service can be increased, the railway
could play a much greater role in future. However in practice this is likely to be
constrained in the short-term by the institutional capacity of the railway.
Infrastructural bottlenecks are to be found everywhere because most of the track,
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bridges, rolling stock and other equipment is obsolete. The priority for investment
is therefore to intervene in the most crucial areas required to sustain the capacity
of the railway, in order to continue safe and stable operations. This would enable
the railway to carry traffic levels similar to those handled at present, while
institutional reforms are carried out. This calls for substantial increased
infrastructure investment in rehabilitation of track, bridges and signaling equipment
along the main strategic routes. Further investment to expand capacity should only
be considered if this is certain to increase the financial viability of the railway.
Virtually all of these investments would be through new projects.
Meanwhile the vital policy and institutional reforms required to establish the railway
as a commercially and economically viable organization are three-fold:
(a) establishing the railway as a corporation, organized in a lines-of-business way
with new management systems, to enable a more customer-oriented approach
to management,
(b) placing the relationship between government and the railway on a proper
commercial basis (except for regulatory aspects), with a performance
agreement that encourages efficiency and value for money,
(c) preparing a realistic business plan that the railway can begin implementing in
the short-term to improve efficiency of carrying existing traffic and attract
potential new traffic in the long-term.
Inland Water: Although future potential growth in demand is not large, much can
be done to improve efficiency and reduce costs. The priority short-term
investments are aimed at securing navigational safety and stability along the main
waterways. These include improvements to ports and inland waterways to enable
more efficient vessel utilization and cargo handling and use of larger vessels.
Other investments focus on navigational safety (especially to enable safe nighttime
navigation) and training of water transport staff. Most of these investments would
involve new projects.
To support this investment program, policy measures are required in the following
three key areas, to increase efficiency, safety and level of service and minimize
infrastructure costs:
(a) increasing competition, efficiency and service levels in water transport services,
through equitizing water transport SOEs and establishing a regulatory
framework with minimum entry barriers (subject to minimum safety standards),
(b) establishing a sustainable water management and financing capability
(especially for dredging and other maintenance) to ensure that the improved
facilities offer the planned service and safety level (requiring a clear definition
of responsibilities between inland water and maritime sector management, and
implementation of the current inland water institutional strengthening project
and education programs),
(c) reforming the ports to place overall responsibility with local government, while
enabling more competition and efficiency in management (through
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management contracts and leasing arrangements), in order to remove

bottlenecks to operational efficiency.
Maritime: As roads are improved, ports are revealed to be major bottlenecks in

the entire transport system - these need to be improved in terms of service and
accessibility. In particular, to increase efficiency, safety and level of service of
shipping services it is vital to tackle these bottlenecks, by increasing
productivity/throughput and promoting use of more modern and efficient vessels.
Infrastructure improvements are urgently required in the three gateway ports which
are so vital to Vietnam's international trade. However investment is also required in
other major local ports, in industrial ports, and along main access channels and
busy sea lanes. Investment is also required in safety-related activities in order for
Vietnam to meet its international obligations. The short-term investment priority is
therefore to support efforts at achieving maximum increase in productivity per unit
of investment at the key strategic ports, and improving maritime safety (seafarer's
education, navigational aid facilities etc.). See Figure 7.1 for more details.
Supporting short-term policy and institutional measures cover the supply of

shipping and port services and the way that the subsector is managed, in order to
increase efficiency, safety and level of service, while minimizing infrastructure
costs:
(a) improving port efficiency and level of service, through implementing pilot
projects in commercialization (establishing ports as independent entities with
local involvement in planning and control, with increased autonomy to set
charges, providing management and handling services under contract, and
leasing facilities to private terminal operators to attract private investment and
management know-how),
(b) promoting competition in coastal shipping services, through giving increased
autonomy to ship operators under the VINALINES group (allowing VINALINES
to concentrate on its important function of developing the Vietnamese ocean-
shipping industry) and making a start on equitizing coastal shipping operators,
(c) improving the way the maritime sector is planned and regulated, through
making a clear division of responsibilities between inland water and maritime
subsectors; raising ship inspection and other regulatory standards as required
to meet international obligations; improving VINAMARINE capacity to make
infrastructure plans based on shippers needs, taking account of national
priorities and environmental considerations; and improving the business
environment for private and foreign investment.
Aviation: To meet continued high traffic growth, while raising technical/safety

standards, is a major challenge in both international and domestic markets.
Careful planning is required to minimize investment requirements. In parallel to
strengthening the three gateway airports and implementing improvements required
under international commitments (especially the new air traffic management
system), the overall air network needs strengthening through carefully targeted
improvements at other major local airports. Precise short-term priorities are difficult
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to define with available information. The short-term investment plan therefore gives
priority to completing current projects and to implementing those new projects
required under international agreements or those new projects with high expected
returns (for example at the major airports). This allows more marginal projects to
be reviewed using better planning data over the next five years before decisions to
implement them are taken. See Figure 7.1 for details of these projects.
To support the short-term aviation plan, policy and institutional measures are
required in the following areas, to increase efficiency, level of service and safety,
while minimizing infrastructure costs:
(a) raising technical standards to those required under international agreements,
by implementing the recommendations of the recent legal reform study,
(b) increasing efficiency of the Vietnamese aviation industry, by fostering
competition (between airlines and between support organizations), removing
unnecessary regulatory constraints (such as fares controls), and basing
infrastructure charges more closely on costs,
(c) improving management capacity in the subsector by separating regulatory and
commercial activities (in preparation, in the long-term, for the airports to be
established as independent commercial units) and adopting modern planning
and evaluation methods (to allow future investments to be planned more
effectively).
Transport Sector Management Aspects: Further policy and institutional

measures are required to implement the short-term plan effectively, covering the
following aspects:
(a) coordinating the many regulatory reforms proposed for each mode to ensure
that a consistent approach is followed,
(b) institutional strengthening of the MOT and its subsector agencies, at central
and local levels, to develop and implement transport policies,
(c) seeking support at government level for tackling the financing problems
encountered for all modes of transport,
(d) implementing the far-reaching government programs for equitization in the
transport sector.
These measures are highlighted in the policy and institutional reforms described in
Chapter 8 (which also deals with other aspects common to more than one mode,
such as multimodal transport, rural transport development and cross-border
transport, all of which require policy action in the short-term).
Short-term Projects and Plan
Core projects have been selected for short-term projects which are composed of
ongoing/committed projects and new projects.31 Of the total cost to government at
US$ 7.3 billion, US$ 4.2 billion is for ongoing/committed projects. The road
31
See Figure 7.1 for the assumed implementation schedule of the projects.
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subsector accounts for US$ 4.8 billion (including ongoing/committed projects) or

65% of the total cost to government. However, 75% of this cost is for
ongoing/committed projects, leaving only US$ 1.2 billion for new ones. Port and
shipping subsector requires US$ 1.03 billion (14.0%), air subsector, US$ 0.61
billion (8.4%), railway subsector, US$ 0.55 billion (7.5%), and inland waterway
subsector, US$ 0.35 billion (4.7%) (see Table 7.1).
Available funds during the period of 2001-2005 are about US$ 5 billion, whereas
the investment requirements for maintenance/minor projects, urban and rural
transport, and ongoing/committed projects amount to US$ 5.8 billion, which
exceeds the available funds (see Table 7.2). This makes it difficult for government
to undertake big, new projects, unless new fund sources are found or policy
priority to the transport sector is determined.
Since the investment requirements of the core projects more or less tally with the
fund availability during the Master Plan period, it is assumed that the core projects
would be started during the first five years. Approximately US$ 0.6 billion out of the
total US$ 2.4 billion of the new projects will be disbursed in 2001-2005 period.
Table 7.1
Investment Requirement for the Transport Sector up to 2005
Estimated Capital
Cost to Government
Sector Category Cost (US$ mil)
Total Ongoing % to Capital US$ Mil. % to total
• Primary Road Network Development 4,1021/ 3,5781/ 100 4,1021/ 56.0
• Secondary Road Network Development 663 - 100 663 9.0
Road
• Road Safety 30 - 100 30 0.4
Subtotal 4,795 3,578 4,795 65.4
• Rehabilitation and Minor Improvement 521 47 100 521 7.1
• Capacity Expansion of Critical Sections 26 - 100 26 0.4
Railway
• Operation 136 - 0 0 0.0
Subtotal 683 47 547 7.5
• Port Improvement 101 21 90 91 1.2
Inland • Waterway Improvement 189 72 100 189 2.6
Waterway • Operation & Safety 67 14 100 67 0.9
Subtotal 357 107 347 4.7
• Port Expansion/Development 1,270 438 70 889 12.1
Port &
• Operation & Safety 137 - 100 137 1.9
Shipping
Subtotal 1,407 438 1,026 14.0
• Airport Expansion/Development 626 62 80 501 6.8
Air • Air Traffic Control 112 - 100 112 1.5
Subtotal 738 62 612 8.4
Total 7,980 4,232 7,327 100.0
1/ Including US$ 1.5 billion for urban road projects. Excluding investment outside the public investment
envelope (public or private investment made through commercial funding means, mainly for transport
equipment).
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Table 7.2
Investment Requirements vs. Fund Availability During 2001-2005
US$ billion
• Investment Requirement for the Master Plan Period
(2001-2005)
1) Maintenance/Minor Projects not covered by the VITRANSS 1.0
2) Urban Transport1/ 1.5
3) Rural Transport2/ 0.4
Subtotal 2.9
4) VITRANSS Project
(1) Ongoing/Committed Projects 2.9
(2) New Projects 0.6
Subtotal 3.5
Total 6.4
• Possible Available Fund (Low – High Case) 4.9 – 5.1
1/ At present, there are no definite strategy and investment program for urban transport.
2/ The amount needs to be adjusted based on the strategy which is being developed by the
government.
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Figure 7.1
Implementation Schedule of Short-term Projects
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8 POLICY PRIORITIES AND INSTITUTIONAL IMPROVEMENT TO

SUPPORT THE MASTER PLAN
As described in the previous chapter, a wide range of policy actions are required
for each transport mode to support the implementation of the short-term plan: (a)
to increase efficiency, safety and level of transport service, and (b) to provide the
planned infrastructure cost-effectively with adequate funds.
However effective implementation of the master plan requires policy-making to be

based not just on the viewpoints of each mode but rather based on a view of the
transport sector as a whole. This, in turn, requires effective transport sector
policies in each of the following areas:
• Provision of a regulatory framework and enforcement mechanism to ensure

efficient, competitive transport services, so that the proposed infrastructure
investments achieve the intended benefits without excessive external costs
such as accidents and adverse environmental impacts,
• Development of effective planning capability, to achieve objectives effectively at
reasonable cost,
• Development of adequate construction services, to provide the required
standards of infrastructure with minimum cost,
• Establishment of an adequate infrastructure maintenance capability, so that the
improved infrastructure provides the expected improved transport conditions
over the full planned lifetime,
• Provision of financial mechanisms for development, maintenance and overall
management of the infrastructure, to provide sustainability, and
• Strengthening of sector management to coordinate reform and implement
policies and projects.
This chapter summarizes the policy-making requirements in each of these areas

and then indicates the implications for implementation and need for technical
assistance.
Provision of a Regulatory Framework and Enforcement Mechanism to

Ensure Efficient, Competitive Transport Services
The long-term strategy for establishing the competitive environment for transport
services involves three aspects - (a) a regulatory framework that meets minimum
safety /environmental standards and fosters competition, (b) economically efficient
pricing and cost recovery measures, and (c) equitization/commercialization of
SOEs. The short-term actions required are set out below.
Regulatory Framework: Implementing the regulatory framework for transport

involves:
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• setting clear, minimum technical standards (justifiable on safety and

environmental grounds), especially for road, inland water, railway and
multimodal transport that currently have no proper legal framework,
• development of effective safety/environmental programs to increase
enforcement and achievement of those minimum standards, and to minimize
adverse impacts of transport, especially for road, maritime and aviation
transport which involve serious safety and environmental issues, and
• minimizing barriers to competition in order to promote efficiency, by
consolidating the recent reduction in transport licensing restrictions and
maintaining safety/environmental standards through stricter licensing of
drivers/captains/seafarers and vehicles/vessels.
Pricing and cost recovery policies: Competitive conditions can be enhanced in

the short-term by implementing those policies that can, in practice, remove major
distortive impacts on competition (for example remaining price controls and
inadequate cost recovery from road users), and agreeing specific objectives for
implementing other policies and working out the next steps to be taken.
The recommendations include the phasing out of remaining general fares and
tariffs controls 32 and other distortions such as differential infrastructure charges for
coastal and international shipping, introducing an axle load fee for road vehicles,
and seeking the agreement of the MOT with the Ministry of Finance on the
principles of charging for infrastructure provision.
Equitization and reform of transport SOEs: The equitization program needs to

be accelerated through the MOT's current equitization project by defining a
timetable for equitizing small-scale transport entities (especially the road transport
and the smaller inland water and maritime transport enterprises) and implementing
it. Monitoring the results will allow the equitization rules to be further developed
and applied to large-scale equitization (for example, to shipping enterprises).
For SOEs not to be equitized in the short-term, the priority is to implement,

sometimes on a pilot project basis, a range of commercialization or corporatization
reforms so that these can increase efficiency of SOEs and identify practical
reforms that can be applied more generally in the long-term (especially the railway,
ports and shipping enterprises as mentioned in the previous chapter).
Development of Effective Planning Capability
Efficient planning is hindered by the lack of delegation of basic infrastructure

management functions to the specialized MOT departments, which have
inadequate capacity to act as state administrators for each mode of transport,
32
If government wishes to keep tariffs below cost, replace these controls by specific subsidies awarded to
transporters who can provide the service most efficiently (at minimum cost to government).
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other than for particular purposes such as direct management of infrastructure

maintenance.
The lack of a clearly defined, hierarchical transport network makes it difficult to

handle investments and share administrative roles between the central and local
governments. Defining the primary, secondary and tertiary network proposed in
the VITRANSS should be further elaborated and institutionalized in terms of
functional status, technical standard and specific management responsibility. In
order to develop the network at tertiary level, capacity to make and evaluate plans
by provincial and district authorities should be considerably strengthened.
At present, the database for network planning is extremely weak in Vietnam

especially at provincial and local levels. The ad hoc approach through special
studies like VITRANSS, is not a permanent solution. For sustainable planning and
policy formulation in Vietnam’s transport sector, an adequate institutional
arrangement and system for database management is vital. One suggested
approach would involve (a) coordinating data management between key transport
agencies to consolidate their operation and management information, (b)
conducting periodically (say, 3-5 years) national transport surveys for key aspects
as undertaken by the VITRANSS, and (c) strengthening a unit in MOT/TDSI for
transport database management. Database management at provincial levels
needs to be strengthened in a similar way.
Development of Adequate Construction Services
To provide better quality infrastructure at minimum cost, short-term actions include

raising technical standards and improving competition in the
planning/design/construction business. To raise the quality of Vietnamese
contractors and consultants in the short-term requires (1) stronger incentives for
training (through higher qualification standards), and (2) investment in better
equipment and construction systems. To improve competition in the construction,
dredging and similar businesses, measures should be introduced such as (1) step-
by-step equitization of SOEs, (2) clarification of procurement guidelines, (3)
removal of restrictions on foreign construction companies bidding for foreign
contracts, (4) removal of price controls, (5) encouragement of more contractors to
enter the bidding process, and (6) stricter monitoring of procurement activities.
Establishing an Adequate Infrastructure Maintenance Capability
To ensure that the infrastructure improved under the master plan provides better
transport conditions over the expected lifetime, high priority must be given to
improving maintenance standards and systems in the short-term, both for
primary/secondary infrastructure mainly under direct central government
management, and for tertiary infrastructure mainly under local government
management.
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On the improvement of maintenance of primary and secondary infrastructure, a

wide range of measures have been proposed in past studies and institutional
strengthening projects in all subsectors to (1) increase standards of maintenance,
(2) introduce modern infrastructure maintenance management systems, (3)
strengthen the capacity of MOT specialized departments to manage maintenance,
with new guidance documents and procedures, and training for personnel in new
systems and procedures, (4) increase management incentives by extending the
amount of maintenance carried out under competitive contract, and (5) increase
management incentives in internal maintenance units by giving them greater
autonomy but making them more accountable for services offered.
Relatively little improvement has taken place in maintenance of tertiary

infrastructure so this deserves close attention in the next five years. However
sustainable progress cannot be achieved until the basic networks and facilities,
and their technical standards, have been defined, and responsibilities for
maintenance been clarified. Improvements in maintenance are generally required
in all areas, often involving the replacement of existing ad hoc arrangements with
completely new systems and working arrangements, including (1) definition of
technical standards, (2) linking maintenance planning and financing to the planning
of rehabilitation/upgrading/ new construction, (3) development of modern
maintenance systems and maintenance programs adapted to suit needs at tertiary
level, (4) capacity strengthening of provincial maintenance units, guided by the
MOT agencies, and (5) where opportunities exist, conducting trials of various ways
of delegating maintenance responsibilities to local organizations under contract.
Provision of Financial Mechanisms for Development, Maintenance and

Management of Infrastructure
Implementing the master plan requires improved financing in the short-term, both
for maintenance/management and for rehabilitation/upgrading/improvement/new
construction of infrastructure.
Maintenance Financing: The first priority is to improve maintenance planning and

management, so that available resources are allocated more effectively and the
need for additional resources is minimized. However, even after making such
improvements, current financial allocations would be completely inadequate to
meet future needs, and better mechanisms are required to implement the planned
maintenance programs. The possible improvements include (1) implementing
radically new mechanisms such as the commercially managed fund proposed for
roads, in which a board (including road user representatives) manages an off-
budget fund derived from user charges (not earmarked taxes), (2) some other form
of fund in which tax revenues from users are allocated by the Ministry of Finance
for maintenance purposes and (3) a more straightforward maintenance budgeting
system in which future needs are provided based on planned maintenance
programs. At present, Vietnam has none of these. Allocations of funds are only
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Summary
approximately based on simple norms (like cost per km of route) and control of
financial effectiveness is impossible.
Any of the three types of improvement could be considered in Vietnam for each
mode of transport. The commercially managed road fund is being actively
considered in Vietnam. The road fund concept has many potential advantages for
Vietnam such as (1) enabling finance for road maintenance to be raised with the
active support of road users, and (2) improving efficiency and accountability.
However until the practical problems with such an approach are sorted out, priority
should be given to improving the budget system for each mode: (1) reviewing
current budgetary procedures and need for improvement, (2) making any
necessary changes to budgetary responsibilities and procedures, and (3)
introducing improved systems for maintenance planning and costing, and for
monitoring infrastructure condition.
A start has been made along such lines for roads. Similar improvements in
maintenance planning are being made for inland waterways with a view to
implement an improved system within five years, but work has yet to start on
improving maritime maintenance planning (which is a priority area for
improvement).
New Sources of Development Finance: Developing new sources of investment

finance must be duly considered. Over the master plan period it is expected that
decreased reliance can be placed on ODA funding of transport, and the
government is actively considering new sources of investment finance which can
be mobilized through a transport development fund, including a savings account
that can raise local finance. New sources of finance are also required if the private
sector is to invest in large-scale shipping. Improving the supply of local finance in
the short-term could potentially help to promote much greater investment in
transport because, according to the Ministry of Finance, many foreign investments
cannot currently be disbursed because of lack of reliable supply of counterpart
finance.
There is scope for attracting foreign investment finance for infrastructure through
direct investments, Joint Ventures and BOT-type arrangements. However at
present there is limited interest in making such investments. Nevertheless, to
encourage increased foreign investment in the longer term, the following steps can
be taken by the government, working together with MOT: (1) removal of obstacles
to foreign investment such as restrictive laws on foreign businesses, controls on
prices, use of foreign capital and repatriation of profits, (2) removing the transport
sector from the list of sectors subject to special restrictions on foreign investment
(especially considering that, in connection with modern logistics systems, transport
is often considered as a mere link in the production process), (3) clarification of the
conditions under which liabilities would be placed on government (for example
development risks under BOT schemes) and the foreign investor (labor
obligations), and (4) monitoring how Vietnamese banks offer credit to private
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companies compared to SOEs, and where possible remove obstacles to supply of

credit (both domestic and foreign).
Strengthening of Sector Management
The overall master plan strategy for sector management development involves
enhancing management through decentralization, divesting of commercial
functions and promoting human resources. To implement this strategy in the short-
term, in conjunction with the wide-ranging reforms necessary for the transport
sector, is a major challenge for the MOT in the following seven key areas:
Establishing the regulatory framework: Continued guidance is required from

MOT to ensure that the drafting efforts at subsector level produce proposals that
are consistent with government's overall transport policies and strategy, especially
for (1) multimodal and international aspects, which cannot be handled adequately
at subsector level, (2) ensuring that the recent removal of licence restrictions is
consolidated into a regulatory regime with low entry barriers, and (3) helping to
define the role of local authority in transport regulation.
The MOT should also seek agreement with the Ministry of Finance on the
principles of charging for infrastructure and work with other ministries to phase out
remaining tariff controls on (1) provincial bus routes, if any controls remain, (2)
truck tariffs in mountainous areas, replacing these if required with subsidies for
specific services offered, (3) movements of rice and fertilizer on the railway, (4)
railway passenger tariffs (with two tier charging for foreigners and Vietnamese), (5)
maritime and inland water port tariffs, (6) air transport tariffs (for both Vietnamese
and foreigners), and (7) support services such as dredging and construction.
Strengthening planning and policy-making capacity of MOT: Planning and

policy-making capacity of MOT is insufficient because there are not enough staff
with the required experience in areas such as regulation, pricing, subsidy and cost
recovery policy-making; project and policy evaluation; strategic planning; and
monitoring of policy and project implementation. Furthermore, existing expertise is
spread out in different general departments and in external institutes. Planning
data is also difficult to obtain although the VITRANSS study has managed to
assemble and develop this during the last year.
To strengthen MOT's capacity it is recommended that (1) an institutional reform

plan is developed with the aim of strengthening MOT capacity in the core areas in
planning and policy-making (perhaps by concentrating economics/planning
expertise in one department), (2) strategic planning is improved through modern
planning/evaluation methods and clear guidelines, so that investment priorities can
be established on a rational basis and decision-making delegated to a lower level,
allowing senior decision-makers to focus on overall policy and strategic matters,
(3) the VITRANSS model should be developed to update the forecasts as and
when better planning data become available, (4) regulatory and cost recovery
8-6
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policies are developed using financial analysis tools, (5) systems are developed for
monitoring policy implementation, and (6) an external agency, such as the TDSI, is
appointed to maintain and develop the VITRANSS planning database.
Improve supply of reliable information to decision-makers and planners: The

MOT considers that only 30% of the information it needs is actually available.
Existing statistics reflect the requirements of the past rather than needs of future
decision-makers under market conditions. Many important items such as numbers
of vehicles, traffic flows, tariffs, and accidents are either completely lacking or
cover only part of the sector. Generally the data are often unreliable.
To supply decision-makers with adequate information it is recommended that in

the short term the MOT (1) coordinates a review of information needs by its
agencies at all levels (central, provincial and district) and (2) identifies measures
required to obtain the required information at least cost based on the review and
an assessment of existing database systems.
Coordinate institutional change and promote decentralization: The MOT

should help its agencies to strengthen policy implementation capacity in areas that
(1) involve decisions that can only be taken at government level, (2) involve
significant overlap between modes, or (3) require a common approach between
modes.
This involves (1) renewing the ministry's commitment to delegating powers and
responsibilities for infrastructure management to MOT's specialized departments,
as part of the MOT's current review of responsibilities in the transport sector, (2)
reviewing current procedures for implementing projects through PMUs to try to
streamline administration and reduce delays, (3) taking a strong lead in improving
the management of provincial and district transport infrastructure, (4) establishing
a clearer legal basis for cooperation between ministries and PPCs, especially to
deal with seemingly insurmountable difficulties that are sometimes experienced at
local level (such as getting detailed vehicle registration data from the Ministry of
Police), and (5) initiating liaison groups that involve transport users more fully in
the MOT's work.
Coordinate human resource development: To foster long-term human resource

development, the priority in the short-term is to start formulating comprehensive
human resource development policies and strategies for the whole of the transport
sector. It is recommended that (1) the MOT should renew its commitment to
human resource development by a clear statement of policy objectives, including
increasing training incentives (through raising qualification standards both for
MOT staff and for its external contractors), and training opportunities (upgrading
training programs to serve future needs), (2) in accordance with this policy, the
Labor and Personnel Department of MOT should work with other ministries to
develop a human resource development strategy that covers general technical,
management other basic needs in the sector, in addition to the specific training
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needs in the transport sector identified by VITRANSS and other studies, (3) the
strategy should also cover the specific needs of senior MOT decision-makers and
specialists in transport economics, planning and policy analysis.
Strengthen the basis for financing infrastructure and operations: To

implement proposed improvements in finance of infrastructure and operations, the
subsector agencies need MOT to obtain government support in the short-term for
(a) off-budget funds for infrastructure maintenance (initially the proposed road
fund), (b) raising additional resources for transport investment (through the
transport development fund), and (c) reducing barriers to foreign participation in
transport (for increasing potential finance for container terminals and for
purchasing ships).
Implement equitization and SOE reforms: MOT is responsible for taking the
lead in the equitization program, which requires much to be done in the short-term.
This requires the MOT (a) to appoint full time staff to define and implement a
timetable for carrying out the equitization program, (b) to establish a monitoring
mechanism to allow progress to be assessed and improvements made to the
program, (c) to assess the possible need for greater government support to deal
with staff redundancies caused by SOE reform, (d) to work with government to
enable the SOEs remaining within the large corporations (VINALINES, VINASHIN
and VAC) to have greater autonomy, (e) to seek government support for broader
reforms such as changing the legal status of public interest SOEs to give them
adequate financial autonomy while making them more accountable for use of state
assets and for level of service offered, (f) to seek government support to establish
ferries, pilotage services and other inherently commercial units as business SOEs
rather than as public service SOEs.
Implementing Considerations and Need for Technical Assistance
To make the process manageable, the many recommendations listed above have
to be prioritized further, realistic targets defined and initial implementation steps
defined in more detail. As a first step, the recommendations have been listed in
summary tables in Appendix 8.1 for each mode and Appendix 8.2 for the sector
management aspects. Only when further work on implementation is done would it
be possible to define realistic implementation schedules. Meanwhile the suggested
dates and targets given in the summary tables should only be regarded as
tentative suggestions on which to base further discussion.
Once MOT has finalized a realistic implementation plan based on the master plan
proposals, to minimize the risk of delays and poor coordination of implementation,
consideration should be given to strengthening project and policy implementation
capacity in the transport sector: both through defining the implementation process
and allocating implementing responsibilities for: (1) finalizing the implementation
plan (2) setting up an implementation monitoring system, and (3) anticipating
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obstacles to implementation and taking action to remove them (especially where

this can usefully and effectively decentralize decision-making).
Much technical assistance has been given in areas such as legal reform,
management systems, databases and training, but this has not always been
effective and has not covered all key areas. The approach to human resource
development has been piece-meal and ineffective, often through short on-the-job
training arrangements during projects. Although many training studies have been
carried out, they have not been implemented, partly because relative priorities are
not clear There is no overall human resource development plan for the transport
sector. Donor coordination has been poor. Relatively little assistance has been
given to the railway, to MOT or the PTAs.
Past TA projects have made significant achievements such as helping to establish

new subsector management organizations such as VRA and the project
implementation units. It is clear that to be effective,
• long-term assistance is required in many areas,

• focused on recognized needs,
• with a realistic assessment of resources required,
• aimed at sustaining improvements by effective transfer of know-how and
techniques, and providing future financing mechanisms.
The areas in which technical assistance are required to support implementation of

the VITRANSS master plan in the next five years include the following:
Sector Management: Continued advice on implementing management

organizations and systems within the specialized management departments of
MOT (VRA, VIWA etc.), to enable MOT to devolve to these organizations
responsibility for planning, maintaining and developing infrastructure and to enable
these organizations to fulfill their other oversight functions. Such assistance should
be extended to provincial and district transport administrations to enable them to
make and evaluate local transport plans and to manage infrastructure and
implement central government policies. Complementary assistance to MOT in the
following areas:
• strengthening capacity for strategic transport planning, policy formulation and
implementation (especially in policy aspects such as cost recovery and
regulation),
• legal reform in areas such as incorporating international agreements into
Vietnamese law, establishing a legal basis for multimodal transport, and
developing guidelines for coordinating the legal framework for the sector as a
whole,
• establishing a transport database for decision-makers and experts, to provide
reliable information for policy development and for monitoring project/policy
implementation, at affordable cost,
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• establishing a transport planning database for planners to enable updating of

the VITRANSS transport planning model and its continued application for
forecasting and evaluating transport development options,
• promoting human resource development in the sector through policies and
strategies which increase training incentives and opportunities,
• promoting training of transport managers in concepts such as marketing,
costing, financial planning, fleet planning and control, investment evaluation,
multimodal transport and containerization,
• upgrading technical secondary and vocational training schools and enable them
to become demand-driven rather than supply-driven,
• implementing its equitization plan, especially to define a program and timetable,
and assist in implementing it,
• finding ways to improve supply of finance and donor support.
Roads: Short-term priorities for assistance are:

• improvement of highway management capacity in VRA,
• establishing management systems associated with road maintenance,
• establishing uniform technical and functional standards for roads and bridges,
• implementing the proposed five year road safety program as part of NTSC's
overall transport safety program,
• rural road planning, to develop rural planning policy-making in MOT 33, to
develop planning methods and capacity to implement them at local level,
• provincial transport planning, to strengthen capacity of PTAs to manage
provincial roads and waterways,
• establishing provincial road maintenance systems,
• road financing, to study the possible implementation of a road fund,
• planning for development in the long-term of expressways.
Railway: Priorities are to implement:

• a short-term institutional strengthening project to establish a reform strategy
and give specific help in reorganization, developing business plans and
implementing management systems,
• a longer term institutional strengthening project to implement the reform plans,
• long-term planning of commuter rail services,
• inter-state railway service planning, based on international studies.
Inland Water: Priorities are:

• to complete the ongoing VIWA institutional strengthening project by 2002 and
implement the recommendations in the longer term,
• to promote competition and the role of the private sector in transport services,
ports and support activities such as dredging.
33
Technical assistance needs in rural transport planning and implementation have been taken into account
in preparing the World Bank/DFID Rural Transport II Project (including strengthening of the MOT’s Rural
Transport Unit under a DFID funded TA.
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Maritime: Assistance is required to:

• improve infrastructure management (especially maintenance of access
channels to ports, aids to navigation, search and rescue system),
• commercialize ports (development of policies, introducing management
systems, developing business plans, encouraging private sector investment),
• gateway port planning, to make more detailed development plans for the main
port areas taking account of economic and environmental aspects,
• enhancement of maritime safety and fleet control, to improve safety standards.
Aviation: Assistance is required to:

• strengthen planning/evaluation capacity of CAAV, and its capacity to implement
and enforce regulations developed in accordance with international agreements,
• provide training in commercial aspects of airport management,
• upgrading air safety, through training in use of new CNS/ATM systems,
• provide training in meteorology.
Multimodal: Assistance is also required across all modes to:

• foster multimodal transport operators and services, through regulatory reforms,
encouraging private participation in container facilities, establishing
representative groups and training in modern multimodal concepts.
Although not included in the scope of work of VITRANSS it is clear that, in addition
to the areas of technical assistance identified above, attention should also be
given to the many urban and rural transport issues that impact on planning and
policy-making/implementation in the transport sector. Whereas there are major
efforts being prepared for planning rural transport infrastructure (as mentioned in
the list of TA projects), there are no specific plans for urban studies. In view of the
special problems encountered in larger metropolitan areas, priority should be given
in the short-term to comprehensive planning and engineering studies which
address urban transport needs in HCMC and Hanoi.
8-11
Appendices
Appendix 6.1 List of Major Ongoing/Committed Projects1/
Project Cost
Original Implementing Fund
Project (million US$)
Schedule Agency Source
Total 2001-
I. Road
1. Highway Rehabilitation Project II (Vinh-Dong Ha; 100km) 1997-2000 MOT 236.6 23.7 WB
2. Highway Rehabilitation Project III (Can Tho-Nam Can; 230km) 2000-2004 MOT 180.0 180.0 WB
3. Highway Rehabilitation Project (Hanoi-Lang Son; 190km) 1997-2000 MOT 162.5 16.3 ADB
4. 2nd Road Development (Nha Trang-Quang Ngai; 600km) 1999-2002 MOT 163.0 81.5 ADB
5. Trans Asia Highway Project (NH22 to Cambodia; 80km) 1999-2002 MOT 144.7 144.7 ADB
6. East-West Corridor Project (ASEAN 8; NH9; 75km) 1999-2003 MOT 30.0 24.0 ADB
7. Bridge Rehabilitation Project - Phase I (435km) 1995-2000 MOT 162.2 16.2 JBIC
8. National Highway No.5 Improvement Project (remaining section, 91km) 1995-2000 MOT 215.6 21.6 JBIC
9. Bridge Rehabilitation Project - Phase II (752km) 1996-2001 MOT 211.0 105.5 JBIC
10. Hai Van Pass Tunnel (2 lanes, 14km) 1998-2003 MOT 251.0 225.9 JBIC
11. NH No.18 Widening Projects - Phase 2 (remaining section, 70km) 1998-2003 MOT 232.0 232.0 JBIC
12. National Highway No.10 Upgrading Project (147km) 1998-2003 MOT 302.0 302.0 JBIC
13. Can Tho Bridge Construction 2000-2004 MOT 294.0 294.0 JBIC
14. Thanh Tri Bridge Construction 2000-2004 MOT 410.0 410.0 JBIC
15. Bai Chay Bridge Construction 2000-2004 MOT 98.0 98.0 JBIC
16. Binh Bridge Construction 2000-2004 MOT 80.0 80.0 JBIC
17. Trans HCMC Highway Project (21.4km) 2000-2004 MOT 758.6 758.6 JBIC
18. My Thuan Bridge (1,535m) 1997-2000 MOT 79.3 15.9 Australia
19. East-West Corridor Project (ASEAN 7A; NH12A, 29; 120km) MOT 65.0 39.0 GOV
20. Rehabilitation and Upgrading of HCM Highway 2000-2003 MOT 380.0 380.0 GOV
21. NH 14 Rehabilitation Project 2000-2003 MOT 15.0 15.0 GOV
Subtotal 4,470.5 3,463.9
II. Railway
1. Hanoi-HCMC Railway Bridge Rehabilitation 1995-2001 VR 104.0 47.0 JBIC
2. Signal and Telecommunication Systems (Hanoi-Vinh) 1997- VR 9.4 9.5 France
3. Tunnel Repair at Hai Van Pass (study) 1997- VR 8.4 8.4 France
Subtotal 121.8 64.9
III. Inland Waterway
1. Ninh Phuc Port Expansion 1995- VIWA 9.0 7.1 GOV
2. Waterway Improvement in Dong Thap Muoi-Long Xuyen Quadrangle 1996- VIWA 7.1 5.3 GOV
3. Inland Waterway and Port Rehabilitation 1997-2003 VIWA 73.0 58.4 WB
4. Vietnam Inland Waterways Project 1998-2002 VIWA 0.8 0.4 CIDA
5. Upgrading of Inland Waterway School No.1 1997-2002 MOT 1.2 0.6 Netherlands
Subtotal 91.1 71.8
IV. Ports & Shipping
1. Cai Lan Port Expansion Project 1996-2001 VINAMARINE 108.4 108.4 JBIC
2. Hai Phong Port Rehabilitation Project - Phase 2 2000-2010 VINALINES 141.0 141.0 JBIC
3. Danang Port Improvemnt Project 1999-2003 MOT 113.0 113.0 JBIC
V. Air
1. Noi Bai International Airport Development Project 1996-2002 CAAV/NAA 57.1 17.1 GOV
GOV & Credit
2. New Passenger Terminal Building (T1) Construction at Noi Bai 1995-2001 CAAV/NAA 80.0 24.0
Loans
3. Expansion of Int'l Passenger Terminal Bldg in Tan Son Nhat 1999-2002 CAAV/SAA 12.0 6.0 SAA
4. Airfield Pavement Overlay in Tan Son Nhat Intern’l Airport 1999-2001 CAAV/SAA 16.0 14.4 SAA
VAC & Credit
5. New Aircraft 2000-2003 VAC 500.0 400.0
Loans
VI. Rural Transport
1. Rural Transport Project I 1996-2001 MOT 60.9 12.0 WB
2. Rural Transport Project II 2000-2005 MOT 145.3 116.0 WB/DFID/GOV
3. Rural Access Project 1998-2000 MOT 1.3 0.0 DFID
4. Rural Infrastructure Devt and Living Standard Improvement Proj (Loan II) 2/ 1998-2002 MPI 133.0 40.0 JBIC
5. Tra My Rural Infrastructure Development 1998-2001 UNCDF/Dist. 1.3 0.4 AusAID
VII. Urban Transport
1. Transport Infrastructure Development in Hanoi 2000-2005 HPC 113.7 113.7 JBIC
TUPWS
2. Urban Transport Improvement 1998-2002 45.0 22.5 WB
(Hanoi,HCMC)
TOTAL 6,180.2 4,717.1

TOTAL (excluding fleets, aircraft) 5,680.2 4,317.1
1/ Exchange rates: US$ 1 is equivalent to VND 14,000, JY 110, FF 6.18, A$ 1.55 and CAN$ 1.46
2/ Amount of project cost is only for the road
6.1-1
Appendix 6.2 List of Candidate Projects with Brief Description
Project Cost1)
Sector Project Description
No. (M US$)
Road Primary Road Network Development
Projects
H10 National Highway No.1 Urban To construct an urban bypass in five major towns (Thanh Hoa, Vinh, 67.0
Bypass (Hanoi-HCMC; 70km) Dong Hoi, Dong Ha, Quang Ngai) to ease traffic congestion and
segregate through traffic to enhance traffic safety.
H14 Hanoi Ring Road To provide bypass and alternative routes to traffic passing through or 256.0
going to Hanoi City that will link all major radial arterials in the outskirts
of the urbanized area. This project includes constructing new bridges.
H19 National Highway No.1 Hanoi - Ninh To widen the road to a four-lane dual carriageway to accommodate 76.0
Binh Widening Project (80km) future traffic demand which is expected to increase rapidly due to
industrialization.
H20 National Highway No.70 Upgrading To improve all the narrow, winding sections of the road, one of the 125.0
Project (Hanoi-Lao Cai; 191km) important international links between Hanoi and Yunnan, China and the
primary access to the northern mountainous provinces.
H22 National Highway No.21 Upgrading To upgrade to the 2-lane design standard. This highway, which will 58.0
Project (80km) links NH10, NH1, NH6, and NH32, will provide the road network in the
south of Hanoi, a potential area of economic growth.
H23 East-West Corridor Project (ASEAN To upgrade to the 2-lane design standard. This highway is one of 90.0
7; NH8, 8B; 110km) ASEAN's primary east-west corridors, linking Vientiane in Lao and Vinh
(Cua Lo) Port in Vietnam. .
H26 National Highway No.40 Upgrading To upgrade to the 2-lane design standard in line with H11. This 14.0
Project (ASEAN 7B,24km) highway is one of ASEAN's primary east-west corridors, linking Pakse
in Lao and Danang Port in Vietnam.
H27 Rehabilitation (NH19, 20, 24, 26, 27, To upgrade the access roads from NH01 to the Central Highlands to 150.0
28) primary and secondary design standards. The roads will form a road
network that will encourage rural economic development.
Secondary Road Network Development
H31 Hanoi-Cao Bang (NH3) To improve this primary access between Hanoi and the northern 148.0
Improvement (310km) mountainous provinces to the standard of a 2-lane secondary road.
H32 Hanoi-Ha Giang (NH2) Improvement To improve this primary access between Hanoi and the northern 137.0
(300km) mountainous provinces to the standard of a 2-lane secondary road.
H33 Hanoi-Dien Bien Phu (NH6) To improve this primary access between Hanoi and the northern 223.0
Improvement (468km) mountainous provinces to the standard of a 2-lane secondary road.
This is also the access road to Vientiane via the northern route, Loa.
H34 Hanoi-Lai Chau (NH32) To improve NH32, a primary access in the area west of Red river. This 200.0
Improvement (390km) road will be within the economic influence area of the future
Metropolitan Hanoi.
H35 North C1 (North-East Ring, NH5- To develop the outer, northeastern ring road of the future metropolitan 101.0
NH3, NH37; 150km) region, linking with primary radial roads.
H36 North C1 (North Ring, NH3-NH70, To develop the outer, north ring road of the future metropolitan region, 122.0
NH37; 115km) linking with primary radial roads.
H37 North C1 (West-South Ring, NH70- To develop the outer, southwest ring road of the future metropolitan 216.0
NH1, NH379/15/47; 295km) region, linking with primary radial roads. The area is mountainous and
has less traffic.
H38 North C2 (North-East Ring, NH5- To develop the northeast ring road in the northern mountainous region 171.0
NH3, NH279; 255km) that will provide better access to the rural area and promote growth.
The area, however, has a steep terrain and less traffic demand.
H39 North C2 (North Ring, NH3-NH70, To develop the north ring road in the northern mountainous region that 83.0
NH279/1B; 120km) will provide better access to the rural area and promote growth. The
area, however, has a steep terrain and less traffic demand.
H40 North C2 (North-West Ring, NH70- To develop the northwest ring road in the northern mountainous region 107.0
NH6, NH279; 150km) that will provide better access to the rural area and promote growth.
The area, however, has a steep terrain and less traffic demand.
H41 Cua Ong-Bac Luan (NH18) Road To improve the road linking Vietnam and China passing through the 92.0
Improvement (130km) coastal area to promote tourism in Ha Long.
H42 Hung Yen-Thai Binh Road (NH39) To improve the road to the standard of a 2-lane route to the Red Delta 124.0
Improvement (100km) area, southeast of Hanoi. This road will provide a better access to the
high-density population and future industrialized area.
H43 HCMC-My Tho Road (NH50) To improve the road passing through future urban areas south of 79.0
Improvement (80km) HCMC, including construction of one long-span bridge. This will be an
alternative route of NH01between My Tho and HCMC via Go Cong.
H44 My Tho-Soc Trang Route (NH60) To improve the road linking coastal provinces (from My Tho, Ben Tre, 235.0
Improvement (120km) Tra Vinh and to Soc Trang) in the Mekong Delta. Ferries connect the
road in 4 main river crossings.
1/ The cost shown is only the one allocated after 2001
6.2-1
Cont. Appendix 6.2
Project Cost1)
No. (M US$)
H45 Can Tho-Ha Tien (NH80) To upgrade the road, an important arterial road for Can Tho and Kien 197.0
Improvement (200km) Giang provinces, to promote industrialization in the Mekong Delta.
H46 Can Tho-Kien Giang-Ca Mau Route To improve the access road in the country's most southern region, 197.0
(NH61, 63) Improvement (200km) including construction of small and medium-size bridges for the many
rivers and canals. The area is flood-prone.
H47 Ho Chi Minh Highway Extn (NH2) To construct two new North-South axes running parallel to NH01, from 58.0
(Chan-Thanh-An Giang; 60km) Chan Thanh (NH13) to An Giang (NH80).
H48 NH22B Improvement (Go Dau-Xau To improve the secondary cross-border link to Phnom Penh, 55.0
Mai; 80km) Cambodia, to a 2-lane design standard.
H49 Secondary Road Network To rehabilitate the road and assure minimum traffic function as 94.0
rehabilitation Program secondary network. The road has small traffic demand, hence its
priority will be comparatively low.
H50 Tertiary Road Improvement Project To rehabilitate the tertiary road network and provide an all-weather 569.0
access route to all the rural centers.
Road Safety
H52 Road Safety Improvement Program To identify accident-prone areas and implement preventive measures 30.0
including education, enforcement and campaign, etc.
Expressway
H53 North-South Expressway 1 (Hanoi- To develop the third North-South axis with modern road facilities. The 930.0
Vinh, 310km) expressway, which will have a 4-lane dual carriageway and access
control, will be in a high economic growth corridor.
H54 North-South Expressway 2 (Vinh- To develop the third North-South axis with modern road facilities. The 1,200.0
Hue, 400km) expressway, which will have a 4-lane dual carriageway and access
control, is expected to have less traffic demand.
H55 North-South Expressway 3 (Hue- To develop the third North-South axis with modern road facilities. The 300.0
Danang, 100km) expressway, which will have a 4-lane dual carriageway and access
control, is expected to promote economic growth in the central region.
H56 North-South Expressway 4 (Danang- To develop the third North-South axis with modern road facilities. The 1,650.0
Nha Trang, 550km) expressway, which will have a 4-lane dual carriageway and access
control, is expected to have a comparatively low demand.
H57 North-South Expressway 5 (Nha To develop the third North-South axis with modern road facilities. The 1,260.0
Trang-HCMC, 420km) expressway, which will have a 4-lane dual carriageway and access
control, is expected to strengthen tourism development in the area.
H58 Noi Bai-Ha Long Expressway To develop an expressway, which will have a 4-lane dual carriageway. 750.0
(150km) It is expected to strengthen infrastructure development in one of the
leading corridors for industrial development in the north (Hanoi).
H59 HCMC-Vung Tau Expressway To develop an expressway, which will have a 4-lane dual carriageway. 450.0
(90km) It is expected to strengthen infrastructure development in one of the
leading corridors for industrial development in the south (HCMC).
H60 HCMC-Can Tho Expressway 1 To develop an expressway, which will have a 4-lane dual carriageway. 350.0
(HCMC-My Tho; 50km) It is expected to alleviate the traffic congestion on NH01 and enhance
accessibility between the national (HCMC) and regional centers (Can
Tho), thus promoting economic growth. Higher traffic demand is
estimated in this section, due to rapid urbanization.
H61 HCMC-Can Tho Expressway 2 (My To develop an expressway, which will have a 4-lane dual carriageway. 560.0
Tho-Can Tho; 80km) It is expected to alleviate the traffic congestion on NH01 and enhance
accessibility between the national (HCMC) and regional centers (Can
Tho), thus promoting economic growth. Higher traffic demand is
estimated in this section, due to rapid urbanization. (Phase 2)
Subtotal 11,524.0
Railway Rehabilitation and Minor Improvement
R02 Rehabilitation of Tracks & Bridges To rehabilitate 40 bridges and 1,300 km of tracks, widen formation level 325.0
width (1,300 km) and introduce Multiple Tie Tampers (MTT) for all VR lines.
R04 Hai Van Pass Tunnel To construct Hai Van Pass tunnel (10 km) with double tracking and 389.0
install electricity on Danang - Hue section.
R05 Signal and Communication To modernize signals and switches, provide optical fiber cable and 128.0
Equipment Modernization install Automatic Train Stop (ATS).
R07 Alarm at Crossings To install alarm and barriers at approximately 600 crossings to prevent 21.0
accidents.
Capacity Expansion of Critical Sections
R08 New Stations for Train Exchange To establish new stations for train exchange at sections with more than 26.0
(100 stations) 10-km distance between existing stations.
R09 New Stations for Commuters (30 To establish new stations for commuters in big cities such as Hanoi and 8.0
stations) HCMC.
R10 Large Scale Freight Stations (30 To establish large-scale freight stations at every 100-km distance. 486.0
stations)
1) The cost shown is only the one allocated after 2001
6.2-2
Cont. Appendix 6.2
Project Cost1)
No. (M US$)
R11 Bien Hoa - Saigon section (29.4km) To install double tracks and electricity on Saigon-Bien Hoa section and 130.0
to construct grade separation of Saigon-Go Vap at a cost of US$ 80
million.
R12 Hanoi – Hai Phong section To install double tracks and electricity on Hanoi-Hai Phong section and 293.0
(101.4km) construct grade separation on Hanoi-Gia Lam section at a cost of
US$ 98 million.
R13 Hanoi - Giap Bat section (5.4km) To install double tracks and electricity on Hanoi-Giap Bat section and 32.0
construct grade separation in this section at a cost of US$ 93 million.
R14 Giap Bat - Phu Ly section (51km) To install double tracks and electricity on Giap Bat - Phu Ly section. 129.0
R15 Gia Lam - Yen Vien section (5.3km) To install double tracks and electricity on Gia Lam - Yen Vien section. 13.0
R16 Hanoi - HCMC line (Phu Ly - Hue; To install double tracks and electricity on Hanoi-HCMC Line (Phu Ly- 1,173.7
632km) Hue).
R17 Hanoi - HCMC line (Danang - Bien To install double tracks and electricity on Hanoi-HCMC Line (Danang- 1,682.6
Hoa; 906km) Bien Hoa).
R18 Yen Vien - Viet Tri (62km) To install double tracks and electricity on Yen Vien-Viet Tri section. 115.1
R19 Dong Anh - Ton Dong (5km) To install double tracks and electricity on Dong Anh-Ton Dong section. 9.3
R20 Bac Hong - Van Dien (40km) To install double tracks and electricity on Van Dien-Bac Hong section. 74.3
R21 Single Tracking (Mao Khe - Ha To install new 1000-mm gauge track on the Mao Khe-Ha Long section. 75.4
Long; 48km)
New Lines
R22 Saigon - My Tho (70km) To construct a new line connecting Saigon and My Tho in the Mekong Delta. 382.0
R23 My Tho - Can Tho (100km) To construct a new line extending from My Tho to Can Tho in the 450.0
center of Mekong Delta.
R24 Short-cut Line (Phu Thai - Mao Khe; To construct a shorter line connecting Phu Thai in Hanoi-Haiphong line 31.1
15km) to Mao Ke in Ha Long line.
R25 HCMC - Vung Tau (80km) To construct a new line connecting HCMC (Thu Duc in HCMC-Hanoi 360.0
line) and Vung Tau.
Operation
R26 Rolling Stock Acquisition To install a number of rolling stocks such as diesel/electric locomotives, 1,882.0
passenger cars, freight wagons and EMUs.
R28 CTC and Computerization To install a CTC (Centralized Train Control) system and computer 136.0
system for ticketing and work management.
Subtotal 8,351.5
Inland Port Improvement
Waterway W01 Hanoi/Khuyen Luong Port To expand the berth and warehouse and purchase cargo handling 11.0
Improvement equipment, such as crane and forklift, for ports located along the Red
River near the capital.
W05 Viet Tri Port Improvement To expand the berth and warehouse and purchase cargo handling 3.5
equipment, such as crane and forklift, for the port located along the
Red River and Lo River.
W07 Hoa Binh Port Improvement To expand the berth and warehouse and purchase cargo handling 4.0
equipment, such as crane and forklift, for the port located along the Da River.
W10 Vinh Thanh (Vinh Long) Port To expand the berth and purchase cargo handling equipment, such as 4.3
Improvement crane and forklift, for the port located along the Co Chien River
connecting with the Tien Giang River.
W12 Ca Mau Port Improvement To expand the berth and warehouse and purchase cargo handling 2.9
equipment, such as crane and forklift, for the port located along the
Ganh Hao River.
W14 Cao Lanh (Dong Thap) Port To expand the berth and warehouse and purchase cargo handling 6.4
Improvement equipment, such as crane and forklift, for the port located along the
Tien Giang River.
W16 My Thoi (Long Xuyen) Port To expand the berth and warehouse and purchase cargo handling 6.2
Improvement equipment, such as crane and forklift, for ports located along the Hau
Giang river.
W18 Passenger Terminal Development To construct a wharf and passenger terminal facility at each port in 2.2
Hanoi and Hai Phong (north) and HCMC and Can Tho (south).
W20 Other Local Port Development To establish a local river port in each province in the delta regions and 47.7
some provinces in central Vietnam. Each port will have the minimum
facility to ensure efficient operation.
W22 Quang Ninh-Hanoi/Pha Lai To dredge the waterway and increase its transport capacity and ensure 13.9
Waterway Improvement safe navigation. The project will also involve rehabilitation of groynes
and the Duong bridge.
W23 Ninh Binh/Nam Dinh-Hanoi To dredge the waterway and increase its transport capacity and ensure 19.9
and the development of the DNC (Day/Ninh Co) canal.
6.2-3
Cont. Appendix 6.2
Project Cost1)
No. (M US$)
W24 Quang Ninh-Nam Dinh/Ninh Binh To dredge the waterway and increase its transport capacity and ensure 6.0
and correction of bends.
W25 Hanoi-Viet Tri-Lao Cai Waterway To improve the waterway, a potential route for trade with China. Major 74.0
Improvement improvements are dredging, rehabilitation of groynes and Red River
embankment in Hanoi.
W27 Viet Tri - Tuyen Quang/Hoa Binh To dredge and improve the waterway to increase transport capacity 3.6
Waterway improvement and ensure safe navigation.
W28 Pha Lai - Thai Nguyen/Bac Giang To dredge and improve the waterway to increase transport capacity 3.6
Waterway Improvement and ensure safe navigation.
W33 Thi Vai-Nuoc Man Canal To improve the waterway which is expected to be a new route directly 3.2
Development connecting Thi Vai and Saigon Port. Major improvements are capital
dredging for expansion of channels.
W34 HCMC - Moc Hoa/Ben Keo/Ben Suc To dredge and improve the waterway to increase transport capacity 6.5
Waterway Improvement and ensure safe navigation.
W35 Da River and Hoa Binh Port To contribute a new power plant at Son La, upstream from Hoa Binh. 2.1
Improvement in Hoa Binh Lake Navigation aids will be installed on this route.
W36 Cuu Long-Cambodia Waterway To dredge Can Tho-Tan Chau route (Hau River) and Cua Tieu-Cho 20.5
Improvement Moi route (Tien River) to allow passage of 5,000 DWT ships. These
are important waterways for international transport to/from Cambodia.
W37 Island Service Improvement (Co To To install navigation aids on the major route to/from Co To and Cat Ba 2.5
and Cat Ba Islands) islands to ensure safe navigation and to support linkage between
remote islands and the mainland.
W38 Island Service Improvement (Other To install navigation aids on these minor routes to ensure for safe navigation 4.6
Islands) and to support linkage between remote islands and the mainland.
Operation & Safety
W39 IWT Safety Enhancement To install navigation aids and equipment for rescue and salvage operations 52.7
thus promoting safe navigation in inland waterway transport.
W43 IWT Fleet Development To install a number of IWT fleets such as tag boats, barges, self-propelled 191.9
vessels, small boat and oil tanker for cargo and passenger ships.
Subtotal 493.2
Port & Port Expansion/Development
Shipping P05 Cua Lo Port Project To expand berths (660 m), purchase cargo handling equipment and 49.3
construct anti-siltation dike to increase port capacity from 0.3 million
tons/year to 2.6 million tons/year. The project will contribute to East-
West transport corridor development.
P07 Danang Bay - Lien Chieu Port To construct a new port in the central region, located 15 km west of 158.0
Development Danang city. The port, designed to cater to 30,000 DWT container
vessels, will have a depth of -12 m.
P10 Specialized Port for Dung Quat To construct general-cargo berths (820 m), berths for discharging 130.0
Industrial Zone crude oil and loading domestic oil for Oil Refinery No.1 and the
planned industrial zone in Dung Quat.
P12 Qui Nhon Port Development To expand berths and the pier and purchase cargo handling 36.0
equipment to increase port capacity up to 3.5 million tons/year.
P14 Nha Trang Port Development To expand berths, pier and storage area and purchase cargo 57.0
handling equipment to increase port capacity up to 2 million
tons/year.
P16 Ho Chi Minh City General Port To expand the ports in the HCMC area to increase their capacity 200.0
from 17.5 million tons/year to more than 21 million tons/year.
P18 Baria Vung Tau General Port To expand the ports in Baria Vung Tau and increase their capacity 206.0
to accommodate the estimated 21 million tons of general cargoes
including containers. Baria Vung Tau province is the industrial
center of southern Vietnam.
P20 Can Tho Port Development To increase port capacity up to 3 million tons/year by upgrading 64.0
and widening of berths, ware house and yards, and new port zone
at Cai Sau, and improvement of access channel from river mouth.
P22 Industrial Port Development To improve facilities of industrial ports handling bulky cargoes such 67.0
as cement, coal and petroleum. There are 4 cement ports, 2 coal
ports and 2 oil ports.
P24 Other Local Ports To improve berths and cargo handling equipment at local ports. 22.7
There are 4 ports in the north and 9 ports in the central.
Operation & Safety
P26 Port EDI System at Gateway Ports To install EDI (Electronic Data Interface) system at international 10.0
ports, VINAMARINE and port authorities.
1/ The cost shown is only the one allocated after 2001
6.2-4
Cont. Appendix 6.2
Project Cost1)
No. (M US$)
P27 Large-scale ICD Development To establish two large scale ICD (Inland Container Depot) at 72.2
Project convenient intermodal connection sites in the north and south of VN.
P29 Fleet Expansion and To expand and modernize oceangoing vessels, coastal serving 1,407.0
Modernization Program vessels including container and container equipment.
P31 Development of Aids to Navigation To install ATN (Aids to Navigation) equipment and facilities 63.6
(ATN) including visual ATN, electronic ATN and other ATN support
equipment and facilities.
P33 Maritime SAR and Oil Spill To install maritime SAR (Search and Rescue) equipment such as 52.8
Protection rescue ships, high-speed canoe, lift buoy and life raft and to
purchase oil spill protection equipment for the area of Hai Phong,
Danang and Vung Tau.
P35 Seafarers' Education Upgrading To upgrade facilities, training program, curricula, syllabi and 20.9
Project instructors of VIMARU (Vietnam Maritime University in Hai Phong
and HCMC) and MTTS (Maritime Technical and Training School in
Hai Phong and HCMC).
Subtotal 2,616.5
Air Airport Expansion/Development
A03 Noi Bai Airport Development To expand passenger terminal building up to capacity of 6-6.5 53.9
Project - Phase 1 million per annum. Existing domestic passenger terminal building is
converted to cargo terminal.
A05 Danang International Airport To expand capacity of Danang International Airport to be able to 77.7
Development Project - Phase 1 handle 3 million passengers per annum.
A09 Tan Son Nhat International Airport To construct new international passenger terminal building with 226.7
Development Project capacity of 8 million passengers per annum. The existing
international terminal building is used for domestic passengers.
A11 Secondary Airport Development To expand the capacity of secondary airports such as Cat Bi in Hai 85.6
Project (Cat Bi, Phu Bai, Nha Phong, Phu Bai in Hue and Nha Trang.
Trang)
A13 New Airport Construction Project To construct new airport in Cao Bang and Lao Cai in the north and 83.6
(Cao Bang, Lao Cai, Dong Hoi, Dong Hoi and Chu Lai in the central.
Chu Lai)
A14 Rehabilitation of Tertiary Airports - To improve airport facilities to enhance safety and meet future 120.8
Phase 1 (9 airports) traffic demand. The project covers the nine airports of Dien Bien
Phu, Na San, Vinh, Plei Ku, Phu Cat, Lien Khuong, Buon Ma
Thuot, Rach Gia and Phu Quoc.
Air Traffic Control
A16 Reconstruction of HCM Area To replace the existing HCM ACC with a new equipment and 58.0
Control Center and Noi Bai Air construct a new building for air traffic management using CNS/ATM
Traffic Management Center systems and techniques at Noi Bai Airport.
A17 Provision of Navigation Aids in To Install an Instrument Landing System (ILS) and DVOR/DME in 4.5
Secondary Airport (Cat Bi, Phu secondary airports (Cat Bi, Phu Bai and Nha Trang).
Bai, Nha Trang)
A18 Provision of Control Tower System To install control tower packages and Automatic Weather 1.3
Packages and Automatic Weather Observation Stations (AWOS) in 4 new airports (Cao Bang, Chu
Observation Stations (AWOS) in 4 Lai, Dong Hoi and Lao Cai).
New Airports
A19 Communication and Navigational To replace antiquated navigational equipment and install new 12.2
Equipment Replacement Program equipment such as DME in Phan Thiet, 6 NDBs, voice logging
equipment and other communications and navigation equipment.
A20 Equipment Installation and To install various equipment to meet the new CNS/ATM 32.8
Upgrading Project for New requirements for 2001-2005 (Radar Renewal, ATN, Multimode
CNS/ATM -Phase 1 VHF, HF Digital Link, SAR and ATIS).
A21 Equipment Installation and To install various equipment to meet the new CNS/ATM 10.9
Upgrading Project for New requirements for 2006-2010 (AIS, GAS, MET, ADS-B and other
CNS/ATM - Phase 2 communication and navigation equipment).
6.2-5
Cont. Table Appendix 6.2
Project Cost1)
No. (M US$)
A22 Restructuring of Air Traffic Service - To restructure ATS-DS Circuits and prepare them for the transfer of 2.5
Direct Speech (ATS-DS) Circuits control to Hanoi ATM Center. To restructure the AFTN Circuit and
and Aeronautical Fixed prepare it for the transfer of all Vietnam Airspace to Hanoi.
Telecommunications Network
(AFTN)
A23 Rehabilitation of Civil Aviation To upgrade the training facilities in CATCV such as the Air Traffic 3.0
Training Center of Vietnam (CATCV) Control (ATC) procedural trainer, ATC radar simulator, multimedia
language laboratory and other necessary training equipment.
A24 Flight Calibration of Navigation Aids To contract out, through an annual bidding process, to a specialist 1.1
agency the certification of the safe and satisfactory performance of the
navigation aids in Vietnam.
A25 Test Equipment Replacement and To replace old and worn-out test instruments used for the maintenance 1.9
the Equipment Standards Laboratory of communications and navigation aids and establish a laboratory for
the calibration of test equipment.
Aircrafts
A33 Aircraft Purchase To purchase new aircraft to cope with future passenger demand and 1,889.0
provide better service.
Subtotal 2,665.5
TOTAL 25,650.7
6.2-6
Appendix 6.3 Assessment of Master Plan Candidate Projects
Project Resettle-
Total Network Int'l Social/ Judgement
Ranking Project Project Cost Economic Cost Environ- ment/
Cost Integ- Link- Equity/ (VIT-
No. 2001- Indicator Recovery ment ROW
(US$ mil) ration age Poverty ANSS)
(US$ mil) Acquisition
1 P14 Nha Trang Port Development 57 57 130 c b a b c a A
2 P05 Cua Lo Port Project 49 106 98 c b a b c a A
National Highway No.1 Hanoi - Ninh Binh
3 H19 76 182 54 b c c b b c A
Widening Project (80km)
4 P16 Ho Chi Minh City General Port 200 382 49 c b a b c a A
New Stations for Train Exchange (100
5 R08 26 408 47 b c b b b c A
stations)
Tan Son Nhat International Airport

6 A09 227 635 44 c a c c a a A
Development Project
7 P12 Qui Nhon Port Development 36 671 41 c b a b c a A
Quang Ninh-Hanoi/Pha Lai Waterway
8 W22 14 685 41 b c a c c b A
Improvement
Noi Bai Airport Development Project -
9 A03 54 739 39 c a a c a a A
Phase 1
10 A24 Flight Calibration of Navigation Aids 1 740 44 b a a c a a A
Test Equipment Replacement and the
11 A25 2 742 44 c c b c a a A
Equipment Standards Laboratory
Reconstruction of HCM Area Control
12 A16 Center and Noi Bai Air Traffic 58 800 39 c a a c a a A
Management Center
Restructuring of Air Traffic Service -
Direct Speech (ATS-DS) Circuits and
13 A22 3 802 39 b a a c a a A
Aeronautical Fixed Telecommunications
Network (AFTN)
Quang Ninh-Nam Dinh/Ninh Binh
14 W24 6 808 33 b c a c c a A
National Highway No.1 Urban Bypass

15 H10 67 875 35 c c c b b c A
(Hanoi-HCMC; 70km)
Hanoi-Viet Tri-Lao Cai Waterway
16 W25 74 949 33 b b b c c b A
Improvement
Ninh Binh/Nam Dinh-Hanoi Waterway
17 W23 20 969 32 b b b c c b A
Improvement
Specialized Port for Dung Quat Industrial
18 P10 130 1,099 30 c c a b c a A
Zone
19 R02 Rehabilitation of Tracks & Bridges 325 1,424 29 b b c a a a A
20 W01 Hanoi/Khuyen Luong Port Improvement 11 1,435 26 c b a a b a A
21 W10 Vinh Thai (Vinh Long) Port Improvement 4 1,440 28 c b b a b a A
22 W33 Thi Vai-Nuoc Man Canal Development 3 1,443 30 b c b c b b A
23 P33 Maritime SAR and Oil Spill Protection 53 1,496 30 c c c a a a A
Signal and Communication Equipment
24 R05 128 1,624 29 c b c a a a A
Modernization
25 R07 Alarm at Crossings 21 1,645 29 c c c a b a A
26 W16 My Thoi (Long Xuyen) Port Improvement 6 1,651 24 c b b a b a A
27 W12 Ca Mau Port Improvement 3 1,654 25 c c b a b a A
Secondary Road Network rehabilitation
28 H49 94 1,748 22 a c c a b b A
Program
29 W14 Cao Lanh (Dong Thap) Port Improvement 6 1,754 23 c b b a b a A
30 P20 Can Tho Port Development 64 1,818 23 c b a b c a A
Danang International Airport Development
31 A05 78 1,896 24 c a b c a b A
Project - Phase 1
32 H14 Hanoi Ring Road 256 2,152 25 c c c b b c A
6.3-1
Project Resettle-
Secondary Airport Development Project
33 A11 86 2,237 23 c b b c a a A
(Cat Bi, Phu Bai, Nha Trang)
Communication and Navigational

34 A19 12 2,250 24 b a a c a a A
Equipment Replacement Program
Equipment Installation and Upgrading

35 A20 33 2,282 24 c a a c a a A
Project for New CNS/ATM -Phase 1
36 H50 Tertiary Road Improvement Project 569 2,851 18 a c c a b b A
Rehabilitation of Tertiary Airports - Phase
37 A14 121 2,972 23 c c c c a a A
1 (9 airports)
38 W20 Other Local Port Development 48 3,020 23 c c c a b a A
National Highway No.70 Upgrading
39 H20 125 3,145 16 b a c a b c A
Project (Hanoi-Lao Cai; 191km)
40 R28 CTC and Computerization 136 3,281 22 c c c c a a A
41 W18 Passenger Terminal Development 2 3,283 22 c c b a b a A
42 P22 Industrial Port Development 67 3,350 22 c c a b c a A
43 P24 Other Local Ports 23 3,373 22 c c b b c a A
44 P31 Development of Aids to Navigation (ATN) 64 3,436 22 c b a a a a A
45 P18 Varia Vung Tau General Port 206 3,642 18 c a a b c a A
Danang Bay - Lien Chieu Port
46 P07 158 3,800 16 c a a b c a B
Development
47 H27 Rehabilitation (NH19, 20, 24, 26, 27, 28) 150 3,950 17 a c c a b b B
Cuu Long-Cambodia Waterway
48 W36 21 3,971 16 b a a c b a B
Improvement
49 P26 Port EDI System at Gateway Ports 10 3,981 22 c a a a a a B
50 P27 Large-scale ICD Development Project 72 4,053 22 c b a a b a B
HCMC-Can Tho Expressway 1 (HCMC-
51 H60 350 4,403 18 b c a c c c B
My Tho; 50km)
52 W05 Viet Tri Port Improvement 4 4,407 17 c b b a b a B
East-West Corridor Project (ASEAN 7;

53 H23 90 4,497 18 b c c a b b B
NH8, 8B; 110km)
North C1 (North Ring, NH3-NH70, NH37;

54 H36 122 4,619 20 b c c b b b B
115km)
Can Tho-Ha Tien Improvement (NH80)
55 H45 197 4,816 19 b b c b c b B
(200km)
Cua Ong-Bac Luan (NH18) Road
56 H41 92 4,908 19 c b c b b b B
Improvement (130km)
Hanoi-Cao Bang (NH3) Improvement
57 H31 148 5,056 14 a b c a b b B
(310km)
North C1 (North-East Ring, NH5-NH3,
58 H35 101 5,157 19 b c c b b b B
NH37; 150km)
New Airport Construction Project (Cao

59 A13 84 5,240 19 c c c b b b B
Bang, Lao Cai, Dong Hoi, Chu Lai)
Provision of Navigation Aids in Secondary

60 A17 5 5,245 19 b a a c a a B
Airport (Cat Bi, Phu Bai, Nha Trang)
Provision of Control Tower System
Packages and Automatic Weather
61 A18 1 5,246 19 c c a c a b B
Observation Stations (AWOS) in 4 New
Airports
Equipment Installation and Upgrading
62 A21 11 5,257 19 c a a c a a B
Project for New CNS/ATM - Phase 2
Hung Yen-Thai Binh Road (NH39)

63 H42 124 5,381 19 c c c b b b B
Improvement (100km)
6.3-2
Project Resettle-
Da River and Hoa Binh Port Improvement
64 W35 2 5,383 19 b c c c a a B
in Hoa Binh Lake
65 R12 Hanoi - Haiphong section (101.4km) 293 5,676 16 b b b b c c B
Can Tho-Kien Giang-Ca Mau Route
66 H46 197 5,873 16 a c c b c b B
(NH61,63) Improvement (200km)
Hanoi-Ha Giang (NH2) Improvement
67 H32 137 6,010 13 a b c a b b B
(300km)
HCMC-My Tho Road (NH50)
68 H43 79 6,089 17 b c c b c b B
Improvement (80km)
NH22B Improvement (Go Dau-Xau Mai;
69 H48 55 6,144 16 b b c b b b B
80km)
70 R13 Hanoi - Giap Bat section (5.4km) 32 6,176 16 c c b b c c B
71 H26 14 6,190 14 c b c a b b B
Project (ASEAN 7B,24km)
Hanoi-Lai Chau (NH32) Improvement
72 H34 200 6,390 12 a c c a b b B
(390km)
Hanoi-Dien Bien Phu (NH6) Improvement
73 H33 223 6,613 10 a b c a b b B
(468km)

74 H22 58 6,671 15 b c c c c c B
Project (80km)
75 R04 Hai Van Pass Tunnel 389 7,060 13 a c c c c a B
76 R11 Bien Hoa - Saigon section (29.4km) 130 7,190 13 b c b b b c B
Island Service Improvement (Co To and
77 W37 3 7,192 15 b c c a a a B
Cat Ba Islands)
Island Service Improvement (Other
78 W38 5 7,197 15 b c c a b a C
Islands)
North-South Expressway 2 (Vinh-Hue,
79 H54 1,200 8,397 14 b c b c b c C
400km)
Viet Tri - Tuyen Quang/Hoa Binh
80 W27 4 8,401 14 b c b c c a C
Waterway Iimprovement
81 H58 Noi Bai-Ha Long Expressway (150km) 750 9,151 12 b c a c c c C
82 W07 Hoa Binh Port Improvement 4 9,155 12 c c b a b a C
HCMC - Moc Hoa/Ben Keo/Ben Suc
83 W34 7 9,161 15 b c c c c a C
North-South Expressway 5 (Nha Trang-

84 H57 1,260 10,421 12 b c a c c c C
HCMC, 420km)
85 R22 Saigon - My Tho (70km) 382 10,803 14 b c b c b c C
North-South Expressway 1 (Hanoi-Vinh,
86 H53 930 11,733 11 b c a c c c C
310km)
HCMC-Can Tho Expressway 2 (My Tho-

87 H61 560 12,293 11 b c a c c c C
Can Tho; 80km)
My Tho-Soc Trang Route Improvement

88 H44 235 12,528 13 b c c b b b C
(NH60) (120km)
89 R20 Bac Hong - Van Dien (40km) 74 12,602 13 b c c b b c C
90 H59 HCMC-Vung Tau Expressway (90km) 450 13,052 12 b c b c c c C
91 R09 New Stations for Commuters (30 stations) 8 13,060 13 c c b b b c C
92 R10 Large Scale Freight Stations (30 stations) 486 13,546 13 b c b c b c C
93 R16 Hanoi - HCMC line (Phu Ly - Hue; 632km) 1,174 14,720 11 b c c b c c C
North-South Expressway 3 (Hue-Danang,
94 H55 300 15,020 11 b c b c b c C
100km)
Pha Lai - Thai Nguyen/Bac Giang

95 W28 4 15,024 12 b c c c c a C
6.3-3
Project Resettle-
North-South Expressway 4 (Danang-Nha
96 H56 1,650 16,674 11 b c b c b c C
Trang, 550km)
97 R15 Gia Lam - Yen Vien section (5.3km) 13 16,687 11 c c c b c c C
Hanoi - HCMC line (Danang - Bien Hoa;
98 R17 1,683 18,369 11 c c c b c c C
906km)
99 R18 Yen Vien - Viet Tri (62km) 115 18,484 9 b c c b b c C
North C1 (West-South Ring, NH70-NH1,
100 H37 216 18,700 7 b c c b c c C
NH37/15/47; 295km)
Single Tracking (Mao Khe - Ha Long;
101 R21 75 18,776 7 b c c b a a C
48km)
102 R14 Giap Bat - Phu Ly section (51km) 129 18,905 6 b c c b c b C
North C2 (North-East Ring, NH5-NH3,
103 H38 171 19,076 2 b c c b c b C
NH279; 255km)
Short-cut Line (Phu Thai - Mao Khe;
104 R24 31 19,107 3 b c c c b c C
15km)
Ho Chi Minh Highway Extension
105 H47 58 19,165 1 b c c b b b C
(N2)(Chan-Thanh-An Giang; 60km)
106 R25 HCMC - Vung Tau (80km) 360 19,525 1 b b c c b c C
North C2 (North Ring, NH3-NH70,
107 H39 83 19,608 0 b c c b c b C
NH279/1B; 120km)
North C2 (North-West Ring, NH70-NH6,

108 H40 107 19,715 -2 b c c b c c C
NH279; 150km)
109 R19 Dong Anh - Ton Dong (5km) 9 19,724 -4 c c c b b c C
110 R23 My Tho - Can Tho (100km) 450 20,174 -6 b c c c b c C
H52 Road Safety Improvement Program 30 - c c c a a c A

W39 IWT Safety Enhancement 53 - c c b a a a A
P35 Seafarers' Education Upgrading Project 21 - c b c a a a A
Rehabilitation of Civil Aviation Training
A23 3 - c a a c a a A
Center of Vietnam (CATCV)
R26 Rolling Stock Acquisition 1,882 - c c c c a a A

W43 IWT Fleet Development 192 - c b a a b a A
Fleet Expansion and Modernization
P29 1,407 - c b a a a a A
Program
A33 Aircraft Purchase 1,889 - c a a c a a B
Note: Evaluation Criteria
1. Economy EIRR (%)
2. Network Integration a: Significant
b: Moderate
c: Insignificant
3. International Linkage a: Strong
b: Moderate
c: None
4. Cost Recovery a: Possible
b: Limited
c: None
5. Social Equity/Poverty a: Significant
b: Less significant
c: Neutral/Negative
6. Environment a: No negative impact
b: Minor negative impact
c: Negative impact
7. Resettlement/ROW a: No constraints
Acquisition b: Minor constraints
c: Major constraints
8. Judgement A: High priority
(VITRANSS) B: Medium priority
C: Low priority
6.3-4
Appendix 8.1 Policy and Institutional Reform Actions at Subsector Level
Sub- Action Main

sector Responsibility
ROAD (1) Competitive Framework
• Establish the road act within two years and the implementing regulations within three MOT
years, with
(a) clear/enforceable technical standards,
(b) no quantity controls or fares controls by provinces on non-urban bus services,
(c) no additional minimum financial requirements other than those defined in the
business licence, and
(d) consistency with international requirements such as for vehicle size and weight
regulations for container trucks
(2) Institutional Changes
• Incorporate the short-term recommendations of the World Bank's Road Safety Strategy Government,
Study in the Traffic Safety Strengthening Program proposed to government by NTSC to MOT and other
reduce the number and severity of road accidents: NTSC members
(a) establishing an accident database,
(b) including road safety audits in all road improvement designs,
(c) developing measures to prevent encroachment of roads,
(d) improving education/publicity on road safety,
(e) improving driver training and enforcement.
(f) This requires increasing the NTSC road safety budget from about US$ 1.5 million
to US$ 3 million and including a greater input initially from international specialists
to establish a firm cost-effective foundation for the safety program.
• Implement fully the recommendations of the ADB's Institutional Strengthening TA to MOT, VRA, PPC,
MOT/VRA, deepen the reforms of VRA and extend them to provincial/district levels to PTAs
enable the whole of the primary and secondary networks (and at least 20% of tertiary
roads) to be under proper maintenance within five years
• Target training at road management aspects such as pavement and maintenance MOT, VRA, PPC,
management and contracting procedures PTAs
(3) Funding
• Depending on the results of the forthcoming World Bank workshop, establish a road MOT with Ministry
fund within two years for regular maintenance activities, using off-budget funds raised of Finance
from road users, with a management board responsible to the MOT or the Ministry of
Finance. Allocate to the fund:
(a) VND 250 per litre of diesel and gasoline consumed in Vietnam, initially, to establish
the fund without increasing the budget allocation to road maintenance,
(b) then raise the allocation step-by-step by introducing an axle weight fee and by
increasing the gasoline levy by about 50% within five years
This could raise road maintenance finance from about US$ 80 million to US$ 150
million
(4) Operations/Management
• Equitize all remaining bus and truck SOEs under MOT and provinces within three years MOT, PPC
RAILWAY (1) Competitive Framework
• Establish the railway act within two years and implementing regulations within three MOT/VR
years
• Establish railway inspection unit within MOT within one year to oversee safety aspects MOT
• Establish VR as a corporation, within one year, with six separate HQ business MOT
departments for passenger, freight, operations, rolling stock maintenance, infrastructure
and administration (with equivalent units within each region or union)
• The HQ and the three regions jointly prepare realistic business plans within three years VR
for passenger, freight and other support departments
• Develop management systems (MIS, costing tools, business/financial planning, VR
marketing) within two years, and implement on a pilot basis within three years before
applying throughout the railway within four years.
8.1 -1
Sub- Action Main
RAILWAY (3) Funding
• Introduce low cost marketing measures within two years (ticketing, customer VR
information and customer relations etc.)
• Based on the business plans, establish a performance agreement within four years MOT/VR
between MOT Planning and Implementation Department and VR to define the medium-
term contractual basis for VR's payment for infrastructure (fixed annual fee plus
proportion of revenue earned) and government subsidy (clear operational/financial
targets and obligations on each side)
• Remove remaining controls on railway fares and tariffs, including the two tier fare GPC
structure for foreigners and Vietnamese, within two years
• Rehabilitate and renew existing equipment and infrastructure to sustain carrying VR
capacity in the next three years at minimum investment
• Define the technical standards for future development of infrastructure and new VR
purchases of equipment with modern technology within two years
• Define new operating procedures and rules for adoption of new technology within three VR
years.
• Train management and staff in new systems, manuals and procedures resulting from VR
the organisational reforms and proposed use of new technology within four years.
INLAND (1) Competitive Framework
WATER • Establish the inland water transport act within two years and implementing regulations MOT/VIWA
within three years, with
(a) clear/enforceable technical standards
(b) no restrictions on area or route of operation (only restrictions based on
classification of waterway)
(c) no additional minimum financial requirements other than those defined in the
business licence
• Establish improved VIWA management systems according to Canada-Vietnam TA VIWA
project, including new organization, basic management systems, vessel inspections,
procurement/contracting framework, environmental monitoring plan, and waterways
maintenance plan within three years. On-the-job training provided throughout.
• Implement Canada-Vietnam TA pilot project with new policies, plans and systems in 2002 VIWA
• Replicate pilot project nationally in 2003 VIWA
(3) Funding
• Improve fee collection system to improve cost-effectiveness and assess potential for VIWA
even greater cost-effectiveness by replacing waterway-use fees with vessel-based
fees, within one year.
• Depending on the results of the proposal to establish a road fund, implement within MOT/VIWA
three years a water transport fund on a similar basis (or extend the scope of the road
fund). Establish the water fund with a fuel levy of VND 27 per litre of diesel consumed in
Vietnam. This could provide US$ 9 million in 2005 (50% higher than current waterway
maintenance expenditure)
• Equitize all inland water transport SOEs within five years MOT/Provinces
• Transfer port ownership to provinces and commercialize port management by issuing Government/MOT
management contracts within five years /Provinces
• Lease out port facilities to private investors to provide container handling facilities in at Provinces
least one pilot project within five years
MARITIME (1) Competitive Framework
• Formulate regulations, within one year, for ship inspections and other aspects, as VINAMARINE
required to meet international agreements
8.1 -2
Sub- Action Main
MARITIME (2) Institutional Changes
• Clarify responsibilities between VINAMARINE and VIWA for infrastructure management MOT
by assigning responsibility to VINAMARINE for all coastal areas (except in designated
cases) and designated rivers from the coast (to Haiphong, Saigon and Can Tho Ports)
within one year
• Divest remaining ports and other commercial functions from VINAMARINE within one MOT
year
• Target training at improving port state control inspectors, to implement minimum VINAMARINE
international technical standards of ships, and infrastructure management
• Strengthen VINAMARINE capacity to manage maritime sector (improving dialogue with VINAMARINE
shipping industry and shippers, planning and infrastructure maintenance)
(3) Funding
• Secure private investment in container handling facilities in general purpose ports, in VINAMARINE
accordance with their planned future role (through leasing, joint venture, or BOT) in at
least one port within five years
• Unify coastal shipping and ocean shipping charges for use of maritime infrastructure VINAMARINE
within one year
• Remove GPC control over port charges and allow ports to base charges on their costs Ministry of
within one year Finance
• Equitize remaining maritime service SOEs within one year MOT
• VINALINES should immediately adopt a passive ownership role towards remaining MOT
shipping and port SOEs to foster competition,
(a) avoiding direct financial assistance, and
(b) replacing the present uniform levy charged to members with a lower levy but
charging additional fees for management services offered to its members
• Commercialization of ports by establishing each port as an independent corporation MOT
with management board having local shippers and other representatives - by
introducing reform at one port on a pilot basis within two years and applying the
reforms to all other main ports within five years
• Contract out handling and other services in order to foster competition within two more VINALINES
ports within two years, and within all remaining ports in five years
• Target training at port management (management systems, modern handling VINALINES
methods) and skilled staff (use of modern equipment)
AVIATION (1) Competitive Framework
• Incorporate international technical standards and agreements into Vietnamese law CAAV
within two years by implementing the regulatory changes recommended by the
French/Vietnamese TA.
• Phase out current fare controls to allow more market-based fares and to remove the GPC
two tier fare structure for foreigners and Vietnamese, within two years. Keep option to
impose maximum fares controls under monopoly conditions.
• Strengthen management capacity of CAAV within four years through adopting CAAV
modern traffic forecasting, facility life cycle management, and planning techniques that
involve a broad range of stakeholders in airports. Requires training support.
• Strengthen sector management within five years by introducing/revising legal basis for CAAV
airport authorities and VATM to focus on core regulatory oversight responsibilities, not
commercial activities such as airport ground services and training.
• Provide training on introducing new CNS/ATM system within five years VATM
(3) Funding
• Base airport charges on the infrastructure provision costs at each port, base air traffic CAAV
control charges on ATM service costs, and remove discounts to Vietnamese airlines
within two years in accordance with international agreements
8.1 -3
Sub- Action Main
AVIATION (4) Operations/Management
• To foster real competition in the domestic market, VAC's ownership of Pacific Airlines MOT
should be reduced to that of passive investor, concerned only with obtaining minimum
return on investment and not with business strategy.
• Aviation support units such as supply companies, air service companies, catering and VAC
goods handling should be divested from VAC, starting with three pilot cases within
three years, followed by the rest within five years.
• New airport corporations should be established to manage the commercial airport and Government/
infrastructure management functions in each of the three areas covered at present by CAAV
the airport authorities. Local interests should be represented on the management
boards. Initially, in the next five years, one such corp. should be created as a pilot case.
• Provide training in airport management, including passenger service, business CAAV
development strategies, costing, financial planning, and contracting, to enable increased
commercialisation of airport management and ultimate creation of airport corporations.
MULTI- (1) Regulatory Framework
MODAL • Establish the legal framework for freight carriage (limits of liability, legal basis for MOT
multimodal transport operators and basis for freight forwarders to act as principals
rather than agents) within three years, based on international agreements
• Seek support from government to reform customs regulations, to allow modern MOT
clearance systems and use of efficient logistics systems within three years.
• Accede to main international agreements on international trade and transport, and MOT
incorporate these into Vietnamese law within three years
• Seek support for training in multimodal operations from international operators within MOT
three years
(3) Funding
• Encourage private financing by planning development of container ports and inland MOT
depots within two years and providing land and good access links within five years
• Seek to remove government restrictions in foreign investment in transport within three years MOT
• Seek international support for assistance in establishing a shippers council in Vietnam MOT
to represent users within three years
RURAL (1) Regulatory Framework
• Phase out transport tariff controls in mountainous areas to establish a level playing GPC
field and allow sustainable financing of rural transport services (if necessary with
subsidies awarded by competitive tendering to least-cost operators)
• Establish within one year and train, over the next three years, a rural transport unit in MOT MOT
• Strengthen capacity for managing rural transport in provincial and district PTAs MOT/PTAs/VRA
(planning and evaluation of infrastructure development, maintenance management)
(3) Funding
• Establish a firm basis for financing rural road/water maintenance and development, PTAs/Ministry of
based on the recommendations of the Rural Transport Strategy Study Finance/MOT
CROSS- (1) Regulatory Framework
BORDER • Seek bilateral agreements with neighboring countries that allow efficient, through MOT
movement of transport vehicles/vessels between countries within five years
• Ensure that Vietnamese transport legislation is consistent with international MOT
agreements and main protocols within five years
• Seek support from government to streamline customs and other procedures within MOT
three years
(3) Funding
• Establish a monitoring system for cross-border flows, by transport type and traffic MOT
type, to identify potential bottlenecks so that investments can be targetted where they
are most needed, within one year
8.1 -4
Appendix 8.2 Policy and Institutional Reform Actions for Sector Management
Actions Main
Responsibility
(1) Establish a Coordinated Regulatory Framework

• Work with the Specialized Departments for each mode to develop new MOT MOT/ VRA/ VR/
guidelines to subsector legal departments, within one year, on basis of drafting VIWA/
future regulation of each mode in order to unify legislation within the sector and VINAMARINE
make implementation easier. Covering:
(a) aspects of the overall legal framework that need strengthening or better
coordination, such as the safety, environmental and multimodal aspects
highlighted by VITRANSS,
(b) level of detail in modal acts and implementing regulations,
(c) whether to treat infrastructure and transport activities under the same modal
act or as separate acts,
(d) scope of licensing provisions, following scrapping of past business licences,
to set minimum safety standards while minimizing barriers to competition
(e) proposed future responsibilities and authority of central government agencies
and PPCs/PTAs over licensing or pricing (for example to guide urban bus
services),
(f) the economic basis for minimum technical standards (for example based on
vehicle condition, not age)
(g) how to take account of possible umbrella law on transport and future
international agreements that Vietnam is intending to sign up to.
• Phase out remaining transport price controls within two years to allow prices to GPC/Ministry of
reflect the prices of each mode and each operator (see Appendix 8.1 for details). Finance
Possibly establish the GPC as a competition regulatory body within five years
(2-1) Institutional Changes - Strengthening Planning and Policy-Making Capacity of
MOT
• Develop an institutional reform plan aimed at strengthening MOT in its core areas MOT
(covering organizational changes, functional definitions, management
tools/procedures, staffing and training)
• Concentrate planning and policy-making functions of MOT in a single department MOT
(Planning and Investment) by transferring to it the non-legal functions of the
Transport and Legal Department within one year
• Improve strategic planning through adopting modern planning and evaluation MOT
methods and clear guidelines to delegate planning tasks. Within three years.
• Develop the VITRANSS model as a policy/planning tool to continue analysis of MOT/TDSI
policy options (infrastructure maintenance versus new construction, development
options within each corridor, optimum location and type of ports etc.). Define work
program within three years and carry out program within five years.
• Develop systems for financial analysis (to assess cost recovery policies), and for MOT
operational analysis (to assess infrastructure capacity utilization, transport
efficiency and competition) within five years
• Develop a project and policy implementation monitoring system, within one year, MOT
based on the VITRANSS recommendations (master plan investments and policy
recommendations - see Appendix 8.1) to assess extent of implementation and
enforcement, and need for removal of bottlenecks
8.2-1
Actions Main
Responsibility
(2-2) Institutional Changes - Improve the Supply of Reliable Information to Decision-

Makers
• Identify information needs of MOT and its agencies for making policy and its MOT
implementation, within one year.
• Identify the means to provide reliable information to decision-makers. Implement MOT
within three years.
(2-3) Institutional Changes - Coordinate Institutional Changes Throughout the Sector
• As part of its current review of responsibilities in the transport sector, renew the MOT
MOT's commitment to delegating powers and responsibilities for infrastructure
management to MOT's specialized departments.
• Complete the current government review of organization responsibilities by the MOT
production of legal documents defining the organization, function, tasks and duties
of all provincial and MOT agencies involved in transport sector management, to
clarify responsibilities, to avoid overlap and establish clear lines of authority and
responsibility between them. In particular:
(a) Finalize decrees defining the organization, functions, tasks and duties of
these departments.
(b) Review current procedures for implementing projects through PMUs to
streamline administration and reduce delays, by (i) reducing the need for the
PMUs to refer decisions up to ministerial level, and (ii) reducing the need for
MOT to refer decisions to other ministries.
(c) Rationalize other MOT units to reduce reporting lines, to avoid duplicated
functions, and to establish institutes and support agencies as either part of the
ministry, non-profit-making agencies or as commercially independent units
(d) Seek support from government, within one year, for the minister of transport
to appoint the PTA director, or at least to veto appointments on technical
grounds
Prepare draft documents within one year and implement within two years
• Revise Decree No. 22-CP defining MOT's organization to implement the MOT
ministerial changes within two years
• Take the lead in improving the management of provincial and district transport MOT
infrastructure, by:
(a) setting technical and planning standards for infrastructure, and procedures for
monitoring their application,
(b) establishing procedures for ensuring that local plans are consistent with
national plans,
(c) establishing, in coordination with the Ministry of Finance, detailed guidance
documents and procedures for financing local infrastructure,
(d) strengthening capacity at provincial and district level for managing
infrastructure (not just national and rural infrastructure, but also the
intermediate road network and similar provincial infrastructure)
• Establish joint circulars between MOT and other ministries such as the Ministry of MOT/other
Police, within one year, to provide a basis for exchange of information and other ministries
important areas of cooperation
• Establish liaison groups chaired by the MOT with representatives from transport MOT
users to disseminate policies and gain support for policy measures such as raising
user charges. Establish the first group, for road financing, within one year.
8.2-2
Actions Main
Responsibility
(2-4) Institutional Changes - Coordinate Human Resource Development

• MOT renews its commitment to human resource development by a clear policy MOT/Subsector
statement, with specific objectives, including increasing (a) training incentives Agencies
(higher minimum qualification standards for MOT staff and for external
contractors) and (b) training opportunities (reorient training programs to serve real
needs). Declare policy within one year and define human resource development
programs within three years.
• Strengthen the Labor and Personnel Department of MOT to develop, within three MOT
years, human resource development policies and strategies for the transport
sector, including
(a) reviewing with the Minister of Labor, qualification levels for skilled technicians,
and policies for improving technical training,
(b) training needs for senior decision-makers and specialists/experts,
(c) training needs for managers of transport enterprises,
(d) implementing the specific training needs identified by VITRANSS in inland
water, maritime and aviation transport.
• Coordinate ODA-funded training courses to broaden impact and improve cost- MOT/Provinces
effectiveness (within one year). Identify priority training subjects within two years
and develop train-the-trainer courses and upgrade transport training institutes in
priority subjects.
(3) Strengthen the Basis for Financing Infrastructure
• Seek support from government for establishing, within two years, off-budget funds MOT/Ministry of
for financing infrastructure maintenance for roads and inland water transport (see Finance
Appendix 8.1 for details)
• Seek support from Ministry of Finance and transport users, within three years, for MOT with
mobilization of development resources, with a greater contribution from users Ministry of
(higher fuel levy and/or vehicle/vessel import and ownership taxes) Finance
• Seek support from government and transport users for reducing, within two years, MOT/MPI
restrictions on foreign investment in transport
• Develop plans for possible private investments in ports and other infrastructure MOT/MPI
within two years, and seek government and user support to remove investment
bottlenecks
(4) Implement the Equitization and SOE Reforms in the Transport Sector
• Appoint full time staff in MOT to handle equitization program within one year and MOT/Provinces
give priority to equitizing small-scale transport service and support SOEs under
MOT and provinces (see Appendix 8.1). Define priority short-term program within
two years and monitor implementation in order to adapt the procedures to improve
effectiveness
• Assess, within one year, the possible need for additional compensation or MOT
assistance for staff made redundant through equitization or commercialization,
and seek government support to reduce bottlenecks to reform of transport SOEs
such as ports and railway.
MOT/
• For SOEs not for equitizing in the short term, such as ports, shipping and railway,
Government
establish these as independent corporations to foster competition (as described in
Appendix 8.1). Negotiate performance contracts if necessary to provide a basis for
financial support. Establish the first three corporations within one year as pilot
cases, before implementing nation-wide.
8.2-3
Actions Main
Responsibility
MOT/
• To foster competition amongst SOEs remaining within VINALINES, VINASHIN
Government
and VAC, limit the power of these corporations, within one year, to intervene
directly in SOE business affairs, but improve monitoring of financial performance.
• Promote an efficient and internationally-competitive construction industry by MOT
including construction units in the short-term equitization program and setting
higher qualification standards step-by-step each year (to give incentives for
training and modernization). Consider establishing an equipment leasing
organization to give broader access for contractors to modern specialist
equipment within three years.
• Establishing ferries and similar enterprises as business SOEs (not as public MOT
service SOEs) to allow introduction of greater efficiency incentives and
competition
• Seek government support within two years for establishing infrastructure MOT
maintenance units as more financially independent SOEs to allow introduction of
greater efficiency incentives and competition
8.2-4
VITRANSS Members List (1)
Steering Committee
1. Mr. Nguyen Viet Tien (Chairman) : Vice Minister, MOT

2. Dr. Nguyen Quang Bau (Vice Chairman) : Director, TDSI
3. Dr. Tran Doan Tho (Vice Chairman) : Director General, Planning & Investment Dept., MOT
4. Mr. Nguyen Ngoc Nhat : Director General, Infrastructure Dept., MPI
5. Dr. Dinh Xuan Huong : Vice Director General, CAAV
6. Mr. Nguyen Trong Bach : Vice Director General, VR
7. Mr. Nguyen Vinh Loc : Vice Director General, Int’l Relations Dept., MOT
8. Mr. Bui Duc Nhuan : Vice Director General, VINAMARINE
9. Mr. Ly Huy Tuan : Vice Director General, Transport & Legislation Dept., MOT
10. Mr. Ngo Thinh Duc : Vice Director General, VRA
11. Mr. Ngo Xuan Son : Director General, VIWA
Task Force
1. Dr. Doan Thi Phin (Chirman) : Vice Director, TDSI

2. Dr. Nguyen Nhan : Vice Director General, Personnel & Labour Dept., MOT
3. Mr. Nguyen Toai : Senior Expert, Infrastructure Dept., MPI
4. Mr. Nguyen Quang Vinh : Vice Director, Infrastructure & Urban Dept., DSI
5. Mr. Dinh Viet Thang : Vice Division Manager, Planning & Investment Dept., CAAV
6. Mr. Nguyen Tien Toi : Senior Expert, Planning & Investment Dept., VR
7. Mr. Nguyen Huu Chi : Vice Director, Planning & Investment Dept., VINAMARINE
8. Mr. Nguyen Ngoc Hoi : Senior Expert, VRA
9. Mr. Pham Minh Nghia : Director, Planning & Investment Dept., VIWA
10. Ms. Trinh Thi Hang Nga : Expert, Transport & Legislation Dept., MOT
11. Mr. Nguyen Quy Hung : Chief, Integrated Researching Division, TDSI
JICA Advisory Committee
1. Dr. Shigeru MORICHI : Chairman

2. Mr. Yoichi SUZUKI : Regional Development
3. Dr. Tetsuro HYODO : General Transport Planning
4. Mr. Toshiharu TAKAHASHI : Railway Planning
5. Mr. Kiyoshi SARAI : Road Planning
6. Mr. Yutaka MIYAJI : Port & Maritime Transport Planning
7. Mr. Akira MORIKI : Port & Maritime Transport Planning
8. Mr. Hiroyoshi KAGAMI : Airport & Air Transport Planning
JICA
1. Mr. Takao KAIBARA : Director, First Social Development Study Division

2. Mr. Hidenori KUMAGAI : Deputy Director, First Social Development Study Division
3. Mr. Tetsuro IKEDA : First Social Development Study Division
4. Mr. Kazuya NARUKAWA : First Social Development Study Division
(Vietnam Office)
5. Mr. Takanori JIBIKI : Resident Representative
6. Mr. Takashi HATAKEYAMA : Deputy Resident Representative
7. Mr. Yuichi SUGANO : Assistant Resident Representative
8. Mr. Kazuhuko KIKUCHI : Assistant Resident Representative
VITRANSS Members List (2)
JICA Study Team
1. Dr. Shizuo IWATA : Team Leader/Transport Planning

2. Mr. Takashi SHOYAMA : Deputy Team Leader/Demand Forecast/Transport Planning Modeling (1)
3. Mr. Tetsuo WAKUI : Deputy Team Leader/Transport Planning Modeling (2)/ Economic and
Financial Evaluation
4. Mr. Ken KUMAZAWA : Regional Socio-economic Framework (1)/Cargo Transport Policy (2)
5. Ms. Theresa J VILLAREAL : Regional Socio-economic Framework (2)/Cargo Transport Policy (3)
6. Mr. Kazuharu OIDE : Cargo Transport Policy (1)
7. Mr. Mitsuhiro SASANUMA : Institution and Finance (1)
8. Mr. Makoto ITO : Institution and Finance (2)
9. Mr. Richard TILGHMAN : Institution and Finance (3)
10. Dr. Ian JENKINS : Management and Operation
11. Mr. Michimasa TAKAGI : Road Planning
12. Mr. Tomokazu WACHI : Land Transport, Regional Transport
13. Mr. Toshio UENO : Road Facility Planning
14. Mr. Katsusuke YAMAGUCHI : Natural Environment Consideration
15. Mr. Akitoshi IIO : Social Environment Consideration
16. Dr. Promitivo CAL : Transport Policy
17. Dr. Tetsuji MASUJIMA : Transport Survey (1)/Analysis
18. Dr. Hunki LEE : Transport Survey (2)
19. Mr. Masayuki ISHIYA : Database
20. Mr. Hisashi KOSHIMIZU : Railway Facility Planning
21. Mr. Tatsuo NAKAGAWA : Railway Operation Planning
22. Mr. Toshihiko KAMEMURA : Port Planning
23. Mr. Shinichi TAGAWA : Inland Water Transport Planning
24. Mr. Takasuke MATSUSHITA : Water Transport Policy
25. Mr. Takao YAMAGUCHI : Airport Planning (1)
26. Mr. Masato TAMURA : Airport Planning (2)
27. Mr. Geoffrey THOMPSON : Air Safety Planning
28. Mr. Edlin ROGUEL : Website (1)
29. Mr. Tsuyoshi KUROSAKA : Website (2)
30. Mr. Tamaoki WATANABE : Project Coordination
Vietnam Counterpart Team
1. Dr. Doan Thi Phin : Head of VCT/Deputy Director, TDSI

2. Mr. Nguyen Quy Hung : Chief, Integrated Researching Division, TDSI
3. Mr. Phan Thanh Binh : Chief, Strategy Division, TDSI
4. Dr. Cao Ngoc Chau : Deputy Chief, Forecast Division, TDSI
5. Mr. Tran Minh Phuong : Forecast Division, TDSI
6. Mr. Duong Van Chung : Rural Transport Division, TDSI
7. Mr. Bui Cao Chinh : Chief, Mechanism Division, TDSI
8. Mr. Le Minh Tuan : Computer & Informatics Division, TDSI
9. Mr. Nguyen Dinh Nghien : Deputy Chief, Planning Division, TDSI
10. Dr. Nguyen Dang Minh : Chief, Planning Division, TDSI
11. Mr. Tran Nhuan : Deputy Chief, Planning Division, TDSI
12. Dr. Nguyen Van Chuong : Deputy Chief, Planning Division, TDSI
13. Mr. Hoang Tien Hung : Deputy Chief, Planning Division, TDSI
14. Mr. Hoang Duc Tan : Chief, Computer & Informatics Division, TDSI
15. Mr. Trinh Duc Thang : Price & Norm Division, TDSI
16. Ms. Nguyen To Ha : International Relations Division, TDSI
17. Ms. Nguyen Viet Ha : International Relations Division, TDSI
18. Ms. Lam Thi Phuong : Computer & Informatics Division, TDSI
19. Mr. Le Ngoc Chung : Computer & Informatics Division, TDSI

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Vietnam National Transport Strategy Study (VITRANSS)

3 OVERVIEW OF VIETNAM’S TRANSPORT SECTOR

The active investment in transport infrastructure with particular regard to the

Road and Road Transport

roughly a half came from passenger transport. Expenditure exceeded revenue

Inland Waterway Transport

there are inadequate management systems for infrastructure management,

Civil Aviation Transport

The subsector is confronted by various issues, including (1) Limited competition:

Various subsector issues mentioned above are not specific to particular

4 CONTEXT OF THE TRANSPORT SECTOR

National Development Goals

The transport sector is a key component of national development and a strategic

• Economic Growth: Lessons from past experiences of the country as well as

Regional Development Framework

Regional Development Trend and Policy: In general, industrialization and

To bridge this gap and to meet the long-term development goals of

Regional Development Perspective and Framework for the VITRANSS: The

• Population will increase from 76 million to 110 million (1.4 times).

• Social and economic expansion will considerably intensify traffic demand

• The government’s decentralization policy aims at equitable growth and

• Industrial powerhouses will be scattered all over the country, reflecting

1999 2010 2020

Transport Demand – Present and Future

Overall Demand Growth: In 1999 interprovincial passenger transport demand

International Transport Demand: International movement of goods and

1999 2010 2020

Transport Demand on the Network: At present, traffic movement is significant in

Available Funding Resources for the Transport Sector

Case 1: 1.8% of GDP is continuously invested in the transport sector

Environmentally critical areas in Vietnam are briefly as follows:

5 LONG-TERM TRANSPORT STRATEGIES

Transport Sector Goals

The goal of transport sector development is to contribute to the realization of the

When addressing long-term strategies, the starting point is to define Vietnam’s

“Competitive Transport with Social Equity”.

Transport Sector Objectives and Strategies

Objectives • To meet the needs of transport users at minimum cost

• To establish an effective tertiary/rural road network to provide access to the main

safety and environmental safeguards

Strategies • Develop sustainable funding for infrastructure maintenance (improved budgeting

Objectives • To promote competitive and affordable transport services

• To provide minimum accessibility levels for the poor

Strategies • Equitize bus and truck SOEs to foster competition

Objectives • To establish a reliable national backbone network of main roads

• To establish a competitive environment to promote efficient and high quality services

• To develop new markets (such as container services)

Strategies • Rehabilitation and replacement of rolling stock to sustain the carrying

• To clear bottlenecks in urban areas

• To increase competition within the railway and the transport sector

Strategies • Establish railway as a business corporation, divesting itself of

Strategies • Establish a performance agreement between railway and government

Objectives • To promote competitive and affordable transport and port services

• To improve productivity in transport and port operations

• To encourage a more active participation of the private sector

Strategies • To develop sustainable maintenance fund with cost-effective revenue

Objectives • To promote a competitive, efficient Vietnamese shipping industry

• To develop competitive gateway ports to strengthen port linkages with the

and private sector participation

Strategies • Encourage private funding of container port facilities and operations

Strategies • Promote increased independence of VAC member airlines

regulate the subsector

Objectives • To provide shippers with high-quality, door-to-door transport services